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It’s already well known that Facebook and other social media networks harvest user data and sell it to companies that use that info to peddle their products to consumers. But some lenders have begun to find a new use for this information, scrutinizing Facebook, Twitter, and LinkedIn data to determine the credit-worthiness of loan applicants. It’s an unprecedented practice that consumer advocates say can be unfair or discriminatory—and one that is poised to only become more prevalent in the years ahead.
Among the US-based online lenders that factor in social media to their lending decisions is San Francisco-based LendUp, which checks out the Facebook and Twitter profiles of potential borrowers to see how many friends they have and how often they interact; the company views an active social media life as an indicator of stability. The lender Neo, a Silicon Valley start-up, looks at the quality and quantity of an applicant’s LinkedIn contacts for clues to how quickly laid-off borrowers will be rehired. Moven, which is based in New York, also uses information from Twitter, Facebook, and other social networking sites in their loan underwriting process.
Several international lenders have been using similar tactics for a while. Lenddo, for example, which makes loans to folks in developing countries, denies credit to applicants who are Facebook friends with someone who was late repaying a Lenddo loan. Big banks have not yet jumped on board with this controversial credit-vetting method, but consumer advocates and financial industry experts say it’s probably only a matter of time.
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