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Taking social media into account when borrowing

Apr 01, 2013 Sean Albert

Many individuals have social media accounts these days so they can keep up with their friends, family and favorite brands. Some keep up with the pages simply as a way to communicate, while others post the most intimate details of their lives, making the website their own personal journal entries.

This has been true in both times of prosperity and during the more recent recession - accounts on websites like Facebook, Twitter, LinkedIn and other social media platforms are free. However, elsewhere in these peoples' lives, many have found the past few years to be a trying time. A number of individuals have become further in debt, taken pay cuts or been laid off altogether and have had difficulties making ends meet.

When these factors converge, the individuals involved often have trouble obtaining a loan for years, because of damage to their consumer credit scores. That said, many alternative finance companies are looking into non-traditional methods of scoring people's riskiness. This not only helps would-be borrowers qualify for loans more easily, but doing so can benefit the lenders - it opens their target audience and allows them to see more business.

One thing a number of these companies are considering is using social media sites to judge creditworthiness. According to AGBeat, some smaller lenders are coming up with their own unique scores based on job information, experience and other factors that can be found on personal social networking accounts. The news source said that some other elements are at play as well - making obscene comments or typing in all capitals or lowercase letters are signs that they are risks for not paying a loan back.

On the other hand, some lenders are considering new information that can help provide a comprehensive economic outlook. Namely, the Payment Reporting Builds Credit scoring method is gaining traction - it compiles a score based on a history of repayment on utilities accounts, among other data. This way, more individuals who would be deemed good candidates for loans can find relief.