Some lenders considering social media influence in loan decisions
HOUSTON (KTRK) -- When you apply for a loan, you make sure all of your finances are in order. But what about your social media accounts?
Some financial companies are using social media to evaluate the credit worthiness of their customers.
It's a new trend many are starting to look into. How many followers you have on Twitter or friends you have on Facebook could help you in some cases if you're trying to take out a loan.
BMX biking is Adam Grandmaison's passion and business. He sells T-shirts, hats and stickers on his website. But when he applied for a small business loan to launch a smartphone app, there was a problem.
"The loan company was concerned about the fact I have really bad credit," Grandmaison said.
So the lender hit the brakes on his application.
That's until Grandmaison showed them his company's Facebook page with more than 100,000 "likes" and Twitter account with more than 20,000 followers.
"A strong social networking presence is that; it really kind of acts as your currency in terms of it represents who you are online," Grandmaison said.
Could your online reputation really mean money in your pocket?
Start-up company LendUp still reviews loan applicants' credit reports, but if applicants agree, LendUp also checks out their Facebook and Twitter profiles.
"How long have people had their account? How strong is their network? How diverse is their network? How much do they interact?" Sasha Orloff with LendUp said.
LendUp says it keeps the search narrow.
"We don't look at anything that could be construed as discriminating against somebody for things like race or religion or color or marital status or age," Orloff said.
Consumer experts worry this trend could hurt people who don't use social media or want to keep their accounts private.
The Federal Trade Commission is equally concerned; however, 90 percent of top U.S. lenders still rely primarily on a person's credit score to make decisions. But could social media be factored into a future FICO formula?
"We are always looking at different things," Anthony Sprauve with FICO said. "Social media will fall into that, but right now it's still too early."
The FTC says it's important that anyone who is turned down for a loan is told exactly what information the lender used to make that decision, whether it's a credit report, employment history or even information from a social media page. This gives loan applicants the change to correct any information that may be listed incorrectly.
action13, jeff ehling
- Woman kidnapped, sexually assaulted in SE Houston
- Malaysian leader: Plane's disappearance deliberate
- Vigil held for teen shot in girl's bedroom
- Suspect killed in home invasion in N. Harris Co.
- Brawl breaks out at funeral home on Houston's south side
- Mega Millions jackpot swells to $400 million 15 min ago
- Raiders sign Texans' Antonio Smith
- Motorcyclist dies in crash with wrecker
- Woman accused of punching 4-year-old, killing her
- Police investigating north Houston nightclub stabbing
- Motorcyclist killed in head-on wreck in northwest Houston
- Search continues for clues in women's murders
- Driver charged in deadly SXSW wreck
- Funny video from Jessica Willey's Colorado...
- Mutton bustin' champ steals show
3 min ago
- Battleship Texas celebrates its 100th...
4 min ago