Your Facebook friends could damage your credit rating

Your Facebook friends could damage your credit rating

Movenbank is a US financial firm hoping to launch in the UK by the year-end. It prices its deals based on the borrower’s influence as measured, among other factors, by how many followers or friends he or she has on Facebook, LinkedIn or Twitter, among other sites.

The trend is part of far-reaching changes in the way customers bank and borrow. Most lenders still make use of traditional information kept on file by agencies such as Experian and Equifax, but they are increasingly likely to incorporate other information into their decisions as well.

Some for instance will use payment information from eBay, Paypal and Amazon alongside more traditional sources.

Controversial short-term lender Wonga tracks how potential credit applicants use the website before they apply. It might treat applicants who immediately seek the biggest possible loan differently from those who spend time on the site researching various loan sizes and reading other categories of information.

What the new lenders do….

– Check how active or “influential” you are on Facebook, Twitter and other social media sites and use this information in lending decisions
– Check whether any of your social media contacts are also customers – and see whether they have had repayment problems
– Lenders could make further decisions based on how much contact you had with any one person who, say, was in arrears
– Monitor how you interact with their own website (ie how much information you browsed) before making a lending decision
– Ask you to get your Facebook friends or other contacts to vouch that you are a good risk

and what they may not do:

– Undertake formal credit checks of anyone without their permission
– Directly contact your followers or friends regarding your application without your permission

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