Facebook Friends could Change your Credit Score

BY: KATIE LOBOSCO

Aug 26, 2013 — NEW YORK (CNN/MONEY) — Still not convinced that social networking platforms like Facebook are a threat to your privacy? Already, employers are running credit checks on prospective new hires, and insisting on seeing their Facebook page. How long will it be before "alternative religion" becomes a tracked variable… or one's philosophy about food, raising children, etc.? The outcome is predictable -- and it's not good.

Some tech startups are using your online social data to determine your creditworthiness. Choose your Facebook friends wisely; they could help you get approved -- or rejected -- for a loan.

A handful of tech startups are using social data to determine the risk of lending to people who have a difficult time accessing credit. Traditional lenders rely heavily on credit scores like FICO, which look at payments history. They typically steer clear of the millions of people who don't have credit scores.

But some financial lending companies have found that social connections can be a good indicator of a person's creditworthiness.

One such company, Lenddo, determines if you're friends on Facebook (FB) with someone who was late paying back a loan to Lenddo. If so, that's bad news for you. It's even worse news if the delinquent friend is someone you frequently interact with.

"It turns out humans are really good at knowing who is trustworthy and reliable in their community," said Jeff Stewart, a co-founder and CEO of Lenddo. "What's new is that we're now able to measure through massive computing power." …

Using "big data" to assess credit risk is on the verge of going mainstream. Kreditech has already began selling its technology to national online lenders in Russia and the Czech Republic. Gorlin said he hopes Kabbage will move into that space for lenders as well.

Read the complete story here.


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