It’s an open secret that companies routinely Google job applicants and examine their social media profiles as part of the hiring process. But in a more regulated and cautious lending atmosphere, banks and other financial institutions are starting to look at the social media activity of loan applicants to determine creditworthiness for mortgages and other kinds of loans.
January 10, 2014 marks the day that the Consumer Federal Protection Bureau assumes oversight of the lending industry with new protocols established under the Dodd Frank Act. These new regulations are intended to protect both borrowers and lenders from the kind of meltdown that caused the housing collapse of a few years ago.
What this all means is that most lenders processing applications for mortgages and other kinds of big-ticket consumer loans are taking a closer look at a borrower’s credit history and any other factors that could affect the ability to repay. And increasingly, social media is entering the mix.
Social media can reveal a lot about a loan applicant’s financial and social situation – perhaps more than their actual FICO score or other credit ratings. In addition to revealing the obvious, such as the almost stereotypical drunken party pictures or an announcement about getting fired from a job, social profiles and posts can show lenders what applicants own, whether they spend time in high end places, who they know, and what their values are.
People who post a lot of pictures of expensive vacations, or tweet
about their new car are unwittingly providing income information –
as is someone who keeps a blog about the family’s efforts to save money or talks
online about a couch found on Craigslist. It’s an uncomfortable truth that, in the new, hyper vigilant and cautious atmosphere of consumer lending, virtually anything in cyberspace can – and potentially will- be used against you.
Of course, applicants aren’t required by law to provide links to social media profiles on their loan applications. And it’s certainly possible to adjust privacy settings on some sites to keep information from public view. Some borrowers volunteer that information in an effort to help their chances pf approval too.
But consumer advocates worry that whether they voluntarily share social media activity with lenders or not, borrowers’ creditworthiness could be undermined by social media for many reasons. Because so many kinds of information are revealed not just by what you say or show on social media but also how you use the site and what contacts you have, it’s virtually impossible to know what might be perceived as damaging.
The solution? Stay aware and be proactive, as Jason Hartman advises. Keep profiles up to date and get rid of obviously harmful information. Social media is a powerful tool for revealing who we are – and aren’t – to the world. (Top image: Flickr/webrunner)
Troong, Alice. “Your Social Media Activity Could Prevent You From Getting a Loan.” Fast Company. FastCompany.com. Jan 10 2014.
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