Some Lenders Turning to Facebook as a new Measure of Worthiness

Folks shopping for a loan are in luck! Interest rates will never be lower than right now, but they are told to act now. That is because the Federal Reserve continues to waver on whether changes will be made soon. With the country in tough economic times, it would seem to be the perfect time to refinance or purchase a home.

Lenders are more prudent now about whom they lend to. Gone are the days when they would lend to just about anyone. The government is not looking favorably on companies making loans to people who have a questionable chance of keeping up on the payments. The Obama administration has not taken kindly to foreclosures, even to go as far as to suggest penalties against companies. Therefore, that credit score seems to be an all-important element for would be homeowners these days.

How shocked would one be to find out that a credit score can be affected by the Facebook friends one keeps? It is a real shocker, but a recent article by CNN Money notes that some companies are evaluating this aspect of loan seekers. Now, before panic sets off, this is not something that is being used by the traditional big lenders. The big boys are still examining credit scores and the payment history.

It is the smaller lenders that are searching for new methods for discovering good candidates to lend money to. These smaller outfits are often the ones that have to look to that next tier of loan seekers to drum up business. The groups that come to them are often the ones whose credit scores are not up high enough for a myriad of reasons. It is not always missed payments. It can be age, or not enough history to have built up a solid score.

Some companies have turned to Facebook friends then as a new measure of worthiness. Now one might think, “Huh, how are you going to judge me based on some folks I connect with on Facebook?” The CNN Money tells the story of one company, called Lenddo. What Lenddo does is examine one’s Facebook friends, to see if any of them are people to whom they have lent.

Should there be someone there they have lent to, they go to the next step. Has that friend been late on payments? If they match those criteria, then it is off to the final step. How much interaction has the loan seeker had with this bad credit person? If they interact with each other frequently on Facebook, the site takes that as a bad sign. There is also plenty they can learn from how a person fills out his or her online application.

If the computer location is not the same as the home or work location, that can be a sign of not being truthful. Not filling out the application correctly will also cost a person big time. Attention to detail can be key. Is this a fair way to judge a loan for a prospective client? One may not think so, but these are the tools being used, so folks had better get ready for it.