How Facebook friends could affect your credit score

Online social networks -- and e-shopping habits -- are among the clues to creditworthiness lenders can now assess.

By Jason Notte Aug 27, 2013 9:35AM
Man sitting at dining table with financial adviser (© Corbis)Do you ever look at people's ever-growing number of Facebook (FB) friends or your own pile of online family and acquaintances and wonder what their purpose is?

You hear from only handfuls of them at a time, and your news feed is cluttered with folks who update far more than most of your friends. Unless you're trying to get them interested in your day-to-day minutiae or some project you're putting together, you've just been stacking those friends in a scarcely visible trophy case. Even with thousands of Facebook friends, it can get awfully quiet in the social networking world.


Maybe that's part of the reason why some credit groups are trying to raise the stakes of your "friends" lists a bit. As reported by CNNMoney, lending companies including Lenddo and Kreditech are using the credit histories of your Facebook friends to judge just how likely you are to pay your debts on time.


While traditional lenders lean more heavily on credit scores based on payment history to determine an applicant's worth as a borrower, that leaves out millions of people who don't have credit scores at all. Your Facebook friends -- whom Lenddo scans for payment and default data, which is then used to judge you by the company you keep -- are just one of the thousands of points lenders are now using to give folks without credit scores access to the credit market.


Kreditech, for example, uses up to 8,000 data points when assessing a loan application. The German company culls data from Facebook, eBay (EBAY) and Amazon (AMZN), clocks the amount of time people spend reading over the application on its website and judges applicants harshly if they fill out the form in all-caps or no caps.


Kabbage, an online service that offers cash advances to small businesses, weighs applicants' credit scores along with data such as PayPal and eBay order histories, checking the latter for just how long it took them to close a sale and complete payment.


That "big data" approach to credit is gaining some momentum. CNNMoney pointed out that Kreditech already sells its technology to national lenders in Russia and the Czech Republic. However, until the industry finds a way to stop social media users from gaming the system by unfriending deadbeats and stockpiling "friends" with sparkling credit scores, these new credit points just encourage users to keep padding their friends list for minimal payoff.


More on moneyNOW

16Comments
Aug 27, 2013 12:43PM
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this is great, i'll just create another facebook acct, befriend a bunch of rich hollywood types, and banks will just assume i will pay them back because i am friends with paris hilton?

 

what an awesome idea!  lol

Aug 27, 2013 1:21PM
Sep 1, 2013 7:35AM
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so what happens if you're smart enough to NOT have a FB? The people who live their lives without having to report every time they turn around are far more responsible and put together in my opinion than those who use FB
Aug 29, 2013 9:40PM
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That whole philosophy is just idiotic.  And these people have jobs.
Aug 27, 2013 12:29PM
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Very nice.......quilt by association...You can pick your friends and pick your enemies but your liabilities? They are picked by a credit agency.....really ingenious......thank you internet!
Sep 1, 2013 9:19AM
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When credit scores are allowed for use in employment it is unfair and corrupt.  Why is is unfair and corrupt?  Because it is an attempt to classify en masse something which may or may not be relevant to the employment.  Criminal record is one thing, but credit report is another.  A credit report is generated because government allowed the SS# to be used to identify the individual, however, if there was no connection to SS# people would have credit card or cards with no relationship to government and it would not be part of the employment process.  If the use the credit report they are allowing people whose family incomes are so high giving them a huge advantage because their credit will always be "good."  Using the credit report is just another form of discrimination for those with little resources who will often be without jobs automatically giving them bad credit once they fall behind in payments. Employers who use it to get "good workers based on credit reports never heard of the "BAILOUT" of Wall Street where all involved in outright legalized corruption undoubtedly had HIGH CREDIT SCORES BUT HAD NO INTEGRITY OR HONESTY. 
Sep 1, 2013 3:27AM
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how would they get the SSN of my friends     This is not  even real people   to many people have the same name and many are not even  their  real names    Another worthless MSN Scare  story
Sep 1, 2013 8:20AM
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But just because you know someone or grew up with someone and have not seen these people in years and may not ever see them again.  Some people move away from the old neighborhood so that they can go better, but keep in touch due to Facebook.  Sad choice whoever thought of this idea.
So they same people know Donald Trump which has filed bankrupt on more than one occasion, would that effect their company's or personal credit score as well.
Sep 1, 2013 12:09PM
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facebook died yeas ago, only the "old folk" think it's still hip 
Sep 1, 2013 3:33PM
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Amazing the length lenders will go through to charge customers more interest!

 

 

Aug 27, 2013 1:23PM
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I hope no one checks my credit without my SS number, or they will get a bill from me at 1,000,000 each for ID theft--Yes, I have had to get involved, and the worst offender are low educated police departments, with peoples License plates on cars, containing SS #!
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