Credit scores are based primarily on your debt load, how much credit you have available and your track record for repayment.
But what if your presence in social media, such as how many Facebook friends you have, is added to the formula that determines your creditworthiness, such as the key ingredients used to produce FICO scores.
Could banks begin to use a person’s social network status as a factor in lending? The answer is yes. And that is a concern to consumer and privacy advocates.
Financial technology expert Gi Fernando raised this future scenario in an interview with DailyMail. He believes there is already momentum for social media integration by bankers in their lending decisions.
Fernando, who sold his last start-up to Experian in 2011, later launched Free:Formers, a digital training firm for banks among other businesses.
Potential borrowers with a stable social network would be seen as less of a credit risk than those whose friends change regularly, Fernando said.
“You could easily have a scenario in 10 years where a customer’s chances of credit are determined not only on their spending, but also on their friends, family members and their social profile,” Fernando said. “By giving up a bit more information to the banks, you might stand to benefit in a wider choice of products.”
Fernando also predicts that those without a social media presence in some form would be penalized when applying for credit.