Lenders Turn to Facebook, Twitter to Identify Risky Customers
The Pittsburgh Post-Gazette reports that officers at the Lending Club and other financial institutions are looking at people's activities and friends on social networks; not just to verify identity and income, but as a way to enhance lending decisions that would otherwise be based entirely on credit score. Credit scores only rate a person's history of payment, they don't necessarily predict a person's ability to pay in the future. Things such as status updates referencing a job search or being fired might discourage an otherwise willing lender, regardless of credit score.
The Pittsburg Post-Gazette highlighted a story that we covered back in November about a woman who had her sick-leave benefits revoked because of Facebook photos her insurance company felt contradicted her claim of suffering from severe clinical depression. But even more surprisingly, some creditors are automating this investigative process. Companies are developing algorithms that scrape information from social networks to identify signs of risk in potential customers.
It's not shocking that, after being burned by credit scores and poor lending decisions, banks and other institutions are looking to dig a little deeper before handing over the cash. Lenders, collection agencies and insurance companies are turning to the most obvious place to snag publicly available information about people. Once again, if you post something online, it's never truly private, and scanning Facebook is certainly cheaper than hiring an investigator. [From: Pittsburg Post-Gazette]