Facebook has recently come under fire after 50 million users had their personal details collected without their knowledge or consent. As the company battles to save its reputation, it has become known that the financial sector uses social media to learn about their customers and make decisions based on their profiles. It is somewhat alarming that doing so doesn’t break any laws or count as a misuse of data.
Credit Scores Are Normally Used
Usually, whether a person is a suitable borrower is assessed using their credit score. A higher score means that they are more likely to be accepted for a loan. Credit scores are usually determined by certain factors like the amount of credit cards or bank accounts a person has. It also looks at whether a borrower pays their bills on time and whether they are on the electoral roll.
Facebook Has Become an Alternative Option
However, social media sites like Facebook are being used to verify a person’s identity. What’s more, Facebook is being used predict whether people will be an acceptable borrower. New types of credit scoring companies rely on social media to help banks and other corporations make lending decisions.
The New Credit Scoring
Friendlyscore is an example of one such company and claims to work alongside banks and other firms to build a picture of financial ability by analysing social media use. Additionally, anything from emails to mobile phone activity can also be analysed.
Customers must agree to let Friendlyscore access their accounts by setting up an online account or downloading the mobile app. The customer then chooses which account the company can access. If Facebook is selected, they will develop a general idea of a person’s interests by assessing who they are friends with, what pages they follow and even what they write in their direct messages.
Information can be gathered from other sources as well as social media. Gmail accounts can be accessed to monitor emails. This will give a lender an idea of a borrower’s spending habits. Data such as receipts for online shopping or tickets for events and flights are included in the assessment. LinkedIn can be used to check that a borrower hasn’t lied about their education and employment history.
Surprisingly, This is Completely Legal!
Although the Friendlyscore app seems highly invasive, it aims to help people who have not yet built up a traditional credit history. This could be due to the fact a borrower is young or they are new to the UK.
First time buyers face a difficult situation when applying for a loan because their credit score is often low, simply because they haven’t had a mortgage before. In this scenario, a lender will turn to other sources to assess eligibility and lifestyle. For example, if a borrower claims that they have a small income yet posts pictures of extravagant holidays abroad, they are likely to have their loan application rejected.
Friendlyscore has assured that it doesn’t look at any of the collected data or make financial decisions about borrowers. Any analysis is completed by machines, which confirms a credit score with an accompanying report which is then sent to the lender in question.
