Traditional credit score models
look at typical signs of creditworthiness including salary, length of employment and past payment history. New credit scoring methodology is stepping beyond the status quo and examining an applicant’s social media profile and even nitpicking the application, itself. Did you forget to use capital letters for proper nouns? If so, you lose a few points. Or, are you an all-caps kind of guy? If so, that’s a few more dings to your credit score.
“One such company, Lenddo, determines if you're friends on Facebook
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."
While I understand that Lenddo and the other companies mentioned in the CNNMoney.com article are offering credit to individuals and small businesses that can’t access funds through traditional means, but combing over a social media profile to determine creditworthiness is a bit creepy.
I have 193 friends on Facebook, a paltry amount compared to many profiles that I’ve seen. I keep it small, on purpose, and don’t send friend requests to everyone I meet. I know that there are several people in my friends list that have had financial troubles over the years and never would I think that their problems could negatively impact my ability to obtain credit.
Granted, I have a credit score and a long credit history so I don’t need access to these non-traditional funding methods. My concern is more about the future, if this catches on, could we see FICO adding in a social media score to our credit profile?
Another company mentioned in the article, Kreditech, goes beyond data obtained from social media sites and looks over your application with a fine-toothed comb. No, they aren’t verifying salary information and length of time at each residence, instead the company examines whether you used capital letters for proper nouns or took the easy way out and used all capital letters, instead. These two simple mistakes can negatively impact your Kreditech score.
Now, don’t get me wrong, I dislike all-caps as much as the next person but not everyone understands that using capital letters is a major faux pas. I can see my grandmother using capital letters, that doesn’t mean she’s less creditworthy than a computer-savvy Millennial that uses a mix of capital and lowercase letters.
I think it is great that there are alternative funding methods available to those that need them, but I do think that these companies are taking their creditworthy criteria lists a bit too far.