Chicago, IL (PRWEB) January 18, 2014
In October 2013, a payday lending company called Lendup was founded, claiming to use revolutionary practices that involve social media. The startup company asks applicants to voluntarily give the lender access to their Facebook, Twitter, or other social media sites as a part of the lending process. They may use these sites to verify the information submitted on your application, or to check for other risk factors. Access to the social media sites is not required, but can increase your chances of being approved in some cases.
According to a quote in Time Magazine on November 16th, 2013, “Some of it is verification of information the borrower provides on their application; if things like your current city of residence doesn’t match up with information you’ve provided or LendUp has acquired from another channel, that could be a red flag, as could frequent changes to your contact info.” The lender is not supposed to look at private information such as the applicant’s “likes” or photos, in order to avoid discrimination. That may be a rule that is difficult to monitor, however, it can be somewhat controlled by the applicant’s privacy settings.
CF Funding does not currently use this method as part of the application process, but this trend is becoming more popular among other lenders, and some believe it could one day be mainstream. There have even been rumors that social media could someday be used as a factor in calculating your FICO score. This score is used in over 90 percent of lending decisions in the U.S.
Anthony Sprauve, senior consumer-credit specialist at FICO , has commented to the Wall Street Journal on January 11th, on these rumors, stating “”There could come a time where certain social media could be predictive, and we’re looking at that — but it isn’t yet.” It appears that social media may be involved in more than just payday loan applications in the future.
Some consumer groups are worried that these social media checks will prevent otherwise qualified applicants from getting a loan, or getting a low interest rate. The biggest problem mentioned by consumers is that the Consumer Financial Protection Bureau has not issued any policies to prevent lenders from using social media in the application process.
Since the future of lending is very likely to involve social media scores, there are some precautions you may take to keep your creditworthiness intact. CF Funding suggests you keep your personal information up to date on social media, but do not change it so often that it may look suspicious. Ask your lender if they are using social media to determine your credit. Adjust your privacy settings to ensure that you are only sharing the necessary information. And finally, if you feel that it may hurt your credit application, you could temporarily deactivate your personal page to avoid lenders from using this as a factor. This would only be necessary if the practice becomes mainstream, or begins to affect your FICO score.
CF Funding will keep you updated on how this may affect lending practices in the future.