Your social media score isn’t what it used to be!


Financial tech companies have started backing away from the idea that social media data on you could be a key indicator of your creditworthiness.

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Rethinking the role of social media in lending decisions

Some 70 million Americans have ‘no file’ or a ‘thin file’ with the credit bureaus, which means traditional bank credit models aren’t able to determine whether or not they’ll be a safe credit risk when lending money. That effectively locks those folks out of traditional borrowing channels.

That dearth of info on so many people prompted financial tech companies to explore the idea of using different algorithms to determine your credit worthiness. In lieu of better data, companies started looking at a variety of things including your social media contacts, how long you’ve had your current cell phone number, whether or not you use proper capitalization when filling out online forms and any of a number of other oddball risk-analysis factors. and were among a few companies doing this just a year ago, according to a report in The New York Times.

One of the earliest companies to try this approach was, an alternative online lender that works with online businesses. They had been paying particularly close attention to your friends and associates on social media going back for several years.

But here’s the key: That was all in the past! Now many of these companies are striking a different note. ‘Who your social circle is, or whether you play ”˜Mafia Wars’—we haven’t seen that as very valuable.‘ the CEO of Kabbage just told The Wall Street Journal in an article published this week.

Facebook makes a pivot on the issue

Much of the momentum for social media assessment was being driven by Facebook — and much of the move away from this idea is too.

As recently as last year, the social media giant secured a patent for a proprietary way to gauge creditworthiness through social media, according to Yahoo! Finance. While the technology was primarily intended to minimize spam messages and establish connections between people likely to know each other, a possible use by lenders was being heavily explored.

‘When an individual applies for a loan, the lender examines the credit ratings of members of the individual’s social network who are connected to the individual through authorized nodes,’ the patent’s summary of invention notes. ‘If the average credit rating of these members is at least a minimum credit score, the lender continues to process the loan application. Otherwise, the loan application is rejected.’

Facebook also spent 2014 meeting with online lenders and understanding how they were using user profiles to gauge creditworthiness and assessing what opportunities might be there. But then late last year, the company did an abrupt about-face and locked down profile data that the third-party companies were looking at. Those changes have had far-reaching implications.


The work of startups, academic researchers and even political strategists has been hampered. In particular, The Wall Street Journal reports popular dating app Tinder and now defunct recruiting apps like College Connect and Jobs with Friends were among those companies impacted by the information lockdown.

Read more: 5 things you should never post on social media


The whole idea of using some of ‘soft’ data points from your social media profile may sound new, but it really goes back to a key rule of relationship banking: Know thy customer. Banking used to be a local activity where judgments were made not always based on assets, but on your character.

After several years of this approach being touted as the future of credit applications, the financial tech industry has now swung like a pendulum to the other extreme on the issue.

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