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Weston Title Says Tweets & Status Updates May Factor Into Credit Decisions

Fri Oct 14, 2011 on Blog

Just when you think things couldn’t get any more personal online, Mashable posts an article warning that banks may be using your social media profiles against you. Specifically, they are looking up the profiles of customers and applicants and looking for keywords that may predict future financial behavior. For example, posting you were fired from your job could lead a lender to think you may not be able to meet your financial obligations which will make them hesitant to extend credit to you.

Although it is not legal to decline a credit application based on your social graph (at least not yet), most customers may only see a change in the way the banks market to them. If you post you are looking to use the equity in your home to do some renovations, then you may find yourself on the receiving end of refinance offers.

Things banks will be looking for include:

  • Life changes: Lenders are very interested in what’s going on in your life because they will be able to tailor their product offering to you. Just had a baby? Expect to receive information about savings accounts for college.
  • Financial changes: Particular keywords, such as fired, laid off, foreclosure, attorney, will send red flags to lenders that your financial house may not be in order. So think about what you share with your social network.
  • Your Network: Speaking of your friends, banks may even checkup on what’s going on in the lives of people you are connected to. The thinking behind this is people tend to have the same habits and traits as the people they hang around with. It is unfair but banks may consider you to be high risk if your friends and family members engage in irresponsible behavior.

The takeaway from this is if you want to maintain your credit reputation, then you need to be smart about your social media profiles. Make sure your privacy controls are always adjusted to keep as much information as private as possible.

Banks Check Up On You in Different Areas of Your Life

Of course, social media isn’t the only place banks and lenders are digging around for additional information on you. Below is a list of other ways banks could be checking up on you:

  • Income estimation: Credit bureaus can use credit information to determine your earnings based on previous loans and credit card limits.
  • Home values: If your home is underwater (you owe more on your home than what it is currently worth), banks and lenders may see this as a red flag
  • Rent payments: These are not currently factored into credit scoring models (Experian is looking to change this), but could provide banks and lenders with enough information to assess credit risk on a thin credit file.
  • Bank deposits: If your bank deposits stop suddenly, this may constitute a red flag to a bank or lender who may assume you lost your job or your source of income.