Your social media profile could keep you from getting a loan, as more and more lending companies are researching their potential borrowers on Facebook, Twitter, and other social media sites. However, the trend is raising concerns among consumer groups and regulators.
Lending companies are looking at potential problems like whether applicants used the same job information on their loan application as what they posted on LinkedIn. They also look to see if the borrower shared on Facebook that they were let go by an employer, reports The Wall Street Journal.
Anthony Sprauve, senior consumer-credit specialist at FICO, commented, “There could come a time where certain social media could be predictive and we’re looking at that, but it isn’t yet.” Companies using the practice tend to lend to borrowers with troubled credit histories or no bank account.
Rather than focusing simply on that, they say the use of social media and other factors could help make credit available to people who could otherwise be denied. The companies add that they are careful not to violate federal credit laws.
San Francisco startup Flourish Inc., also called LendUp, uses social media on potential borrowers. Applicants voluntarily share their Facebook, Twitter, and other social sites. LendUp explains that the information provides a more accurate picture of potential borrowers. The more data they provide, the better chance they have of being approved.
While companies like LendUp are the main ones using social media to check out borrowers, larger banks could follow in their footsteps.