Could your social network profile affect your credit score?
moneymarketuk, 18 Mar 2014
When it comes to data mining of personal information it is not just government spies in the NSA and GCHQ you have to worry about, as fears rise that lenders and other financial services organisations are using your Facebook page to influence your credit score.
Already, Hong Kong based lender Lenddo openly admit to doing this, as does Kreditech, a Hamburg-based data analyst, but both operate in emerging markets.
So what are the chances that it is happening here? We spoke to the major credit scoring agencies.
James Jones, head of consumer affairs at Experian said, “I don’t think it is relevant to the UK at this time”, while a spokesperson for Equifax stated “Equifax can confirm that they are not aware of any lenders using information from individuals’ social media sites and are not aware of any signs that this will happen in the near future.”
But not everyone agrees, such as James Benamor, ceo of Amigo Loans, which relies on face-to-face interviews and personal recommendations from friends and family to assess loan applicants. He warned consumers to be wary of Terms and Conditions as well as online application forms that request Facebook details, such as number of ‘friends’ or even log-in information.
We found one instance (see pic), on an application form from directory enquiries company 118-118’s personal loans division, 118-118 Money, asking for number of Facebook friends. William Ostrom, 118-118’s communications director said “We are a new lender so we do not have access to the vast databases that existing lenders have. We ask the question about number of Facebook friends to build a profile of borrowers, we do not ask for log-in details. It gives us a sense of the market. It does not inform our decision on the loan.”
However, Benamor said there are “new data mining companies in the credit checking space” that do use social networking data. He added, “Traditional credit scoring has meant that some 8 million people are now excluded from mainstream finance. This is pushing them into things like payday loans alongside things like credit unions.
If you add social networks into this you will end up with further exclusions which could take in another two million people.”
“Further, you might find a merger taking place between credit scoring and marketing scoring. This would enable organisations to pick up on something you say such as you are thinking of a new car and shortly thereafter you might get a message on car finance. So they will be using what they see on social networking to market more credit to you. Social information gained by lenders will give them a huge amount of extra leverage.”
“My gut feel is that until there is legislation around this area it will be used regularly” he concluded.
By Stephen Spurdon
Read the full article here