Do you know everyone you’re friends with on Facebook? If you don’t, you may want to do some deleting. Some companies are factoring in data from social media to determine whether to lend you money.
One company called Lenddo, which is based in the Philippines, looks at your Facebook friends to see if they’re late paying back a loan. Your social connection to them can cause you to be rejected for a loan.
Christy Neuman has credit counseled hundreds of people through Y Housing Resources. She said she’s not at all surprised.
“The people we surround ourselves with, is usually indicative of the kind of person we want to be,” Neuman said. “So if you’re Facebook friends with folks that have defaulted on their own loans, the likelihood is that you may do that too.”
Atlanta-based Kabbage is an online lender that issues loans to small businesses. Once a company begins borrowing from Kabbage, it can link its Facebook and Twitter accounts to the site. If the accounts are kept up well, it could mean a bigger loan for the company.
“What we’ve found is that people who are engaged on the social media channels for their business, they’re just more on top of that,” said Kabbage Chairman Marc Gorlin. “They tend to be more on top of other parts of their business.”
Gorlin said even though just a few companies are using this type of data to determine how likely someone is to pay back a loan, it’s just a matter of time until it becomes more mainstream.
“It’s not uncommon to look at alternate data sources, in this case, it just so happens to be done in a public place like Facebook or Twitter,” Gorlin said.