Does Facebook Hurt Your Credit?

Posted January 18th, 2010 by Carrie Davis

Are creditors checking out your latest Facebook post?

Probably not, but they may be paying someone else to. Companies like Rapleaf specialize in harvesting your social networking information to better understand your personality, who you associate with, the things you like, and how you spend your money. Rapleaf plots all of this information on a "social graph" and sells it to financial institutions who want to get to know you better (that is, learn if you would make a good borrower).

Your Facebook account isn't likely to trump the importance of your credit rating when it comes to getting a loan. But your online social network may influence banks to send you more offers of credit if they like what they see.

An invasion of privacy?

Of course, plenty of people are up in arms about this kind of "big brother" monitoring. I mean, what right does a creditor have to check out my online social activity? And what do my Tweets or Facebook friends really have to do with my ability to repay debt?

The truth is that banks are doing whatever they can these days to protect themselves from deadbeat borrowers. In addition to reviewing our credit history, banks have long used details like our age, demographic, location, and level of education to make lending decisions. This is just the next step in that information gathering process. Ultimately, if this level of monitoring helps keep the bad borrowers out and the good borrowers in, that's a win for all of us.

Banks may like you more after seeing your social networks

And remember, your social network will likely make you more appealing to a lender, not less. As Joel Jewitt of Rapleaf says, "There is an immediate concern that [social network monitoring is] going to affect the ability [of consumers] to get a financial product, but it makes it more likely that it will work in their favor." Banks may send you a better credit card offer or process your loan faster after finding favorable social network information.

That said, you still have the option of keeping your social networking information private. Make sure you have all of your security settings where you want them. You can choose to only allow those in your network to view your updates and profile details, thereby keeping banks and other marketers out of your business completely. 

Photo courtesy of http://www.flickr.com/photos/mubblegum-/ / CC BY-NC-ND 2.0

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Beyond the privacy concerns,

Submitted on January 18th, 2010 by Ryan Smith (not verified)

Beyond the privacy concerns, I am not sure this is going to be a very helpful tool to creditors beyond the marketing aspects. Most peoples' social graph contains 50 kids they went to junior high with that they haven't spoken to in ten years. Doesn't seem like a real accurate way to decide if they are going to pay their bills or not.

It does make sense that people who make comments about their financial oversights might be an easy targets for credit card companies.

I would love to see more details of exactly what data they are gathering and how they intend to use it. Meanwhile, I will begin tweeting about how awesome my credit score is.

I'm not sure how

Submitted on January 18th, 2010 by Carrie Davis

I'm not sure how individual-specific these "social graphs" get. From what I see on RapLeaf's website, they are primarily summarizing a customer group's online habits for a business, primarily for marketing purposes. http://www.rapleaf.com/products/report
It's true that they probably have the power to capture each of our Tweets and FB profiles, but I'm just not sure that any business would have the resources to take that information, analyze it, and then send us a corresponding offer of credit. So I don't think we need to be all that paranoid. In a way, it's to our advantage to get lost in a sea of other online users. Anonymity through obscurity and all that.