How Facebook Can Affect Your Credit Score

| by Michael Allen
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Lenders normally use credit reports by credit reporting agencies such as Experian, Equifax and TransUnion to determine whether or not to grant a loan to a borrower.

However, credit reporting agencies have included incorrect information on 42 million Americans' credit reports, noted CNN in February.

Now, some financial lending companies are using social media information to decide if people should be given credit.

For example, Lenddo checks to see if you're friends on Facebook with anyone who was late paying back a loan to the lender; if so, that dings your chances.

"It turns out humans are really good at knowing who is trustworthy and reliable in their community. What's new is that we're now able to measure through massive computing power," Jeff Stewart, co-founder and CEO of Lenddo, told CNN.

Kreditech, a German lender, gathers information from Facebook, eBay and Amazon, but also  uses online data from its own website. You get points if you if spend time reading about getting a loan on Kreditech's website, but lose points if you fill out their application in all caps or no caps.

Kreditech also bases its credit decision on whether or not your computer is physically located where you claim to live or work.

Another online lending service, Kabbage, gets permission from would-be borrowers to check their PayPal, eBay and other online payment accounts.

Using that information, Kabbage says it can determine credit worthiness in seven minutes. People who use Facebook and Twitter get extra points.

"Someone who's paying attention to Facebook and Twitter channels to deal with customer service is more likely to be on top of other parts of their business, too, like inventory and shipments," said Marc Gorlin, Kabbage's chairman and co-founder.

Source: CNN