You are going to need to start asking your people who send you a friend request for their financials. It would also probably be best if you go ahead and have your current friends fill out a permission form for you to check on their financial standing as well. Why? Because somewhere along the line, someone decided it was a good idea to check out who you are friends with on Facebook and other social media sites before approving your loan. (I’d immediately delete Gary Busey or Nicholas Cage if you’re friends with either of them.)
A few startup companies are using potential borrowers social media accounts to determine their risk. Normally lenders look at credit scores like FICO which rely mostly on your payment history. These new companies have decided that your social connections are a vital indication on whether or not you will pay back your loan.
Lenddo looks to see if you are friends with someone who is making late payments to them. If you are, that’s an immediate red flag for your application. If it’s a friend that you spend a lot of time interacting with? You’re screwed.
Kreditech is not only using data from Facebook, they are also checking your eBay and Amazon interactions. (I hope they don’t look at my last few book purchases, a couple of them were kind of embarrassing and no I’m not telling you what they were.) They also have a program that basically works as a handwriting analysis, but for the way you fill in the form. All caps or all lower case letters? Lose points. My parents have amazing credit – yet forget to turn the caps lock on or off all the time. Too bad so sad for them I guess. Also if you don’t spend a certain amount of time reading the forms, lose points. Speed readers don’t need loans anyway! They also pinpoint the location of the computer you are using to fill out the form. Library downtown? They must be homeless. No loan for you!
Kabbage, an lender that loans to small businesses, asks for access to borrowers PayPal, eBay and the rest of their online accounts. In just seven minutes of studying, they can completely determine your business’ credit-worthiness.
Right now these companies are only targeting a small portion of the general population.Lenddo is currently only operating in the Philippines, Columbia and Mexico. Kreditech and Kabbage operate in the US though, and expect to triple the amount of loans they are giving out this year.
Kreditech has already sold their technology for assessing loan applications to other companies, and it’s just a matter of time before this form of review is being used by the “big guys” too; to what extent is yet to be seen.
Since the whole recession thing, all of us know someone who probably doesn’t have great credit because of a bankruptcy or foreclosure, someone who never manages to pay the electric bill on time, or someone who forgot about a health club membership they purchased twenty years ago. How can you possibly know who the offenders are? In fact, it may even be me.
I perfectly understand the entire “birds of a feather flock together” adage, but this is seriously overstepping boundaries if you ask me. What do you think – is this a good idea or a terrible, horrible, no good, very bad idea?