For years, traditional financial services as well as alternative financial services, like payday loan companies and auto title loan firms, would simply check your credit score, verify your bank account information and confirm if you are employed in order to determine your creditworthiness. To this date, most credit lenders rely on this system, which some say is actually antiquated and useless.
Well, it seems that payday loan businesses are entering into the 21st century when it comes to accepting or rejecting someone’s application for a short-term, high-interest loan to pay the rent or buy food.
According to a new report, a growing number of payday loan companies are starting to peruse your social media accounts to judge if you are creditworthy. Rather than just taking a look at your FICO score or credit rating, they’re scanning through your social media profiles, whether it’s Twitter or Facebook.
Similar to how human resource departments are embracing this method, so are payday loan firms.
Totally Money, a credit comparison website, explained that payday lenders look for keywords on your social media, such as “drunk” or “party.” And many payday lenders are starting to use a piece of technology called PROFILE, which analyzes customers’ social presence, language and psycholinguistics. By using this measure, payday lenders can discover dates of pay, age, employment status, life events and other factors. Of course, other technologies are taking it one step further for payday loan businesses.
In the near future, many payday loan stores won’t need to read applicants’ social media posts. Instead, they can simply go through their browsing history and what websites they had visited. With this technology in hand, they can search for keywords like “payday loans” or identify information on debt management. In addition, they can also check your mobile phone call history as part of the process.
This means that so-called social credit scores will be a massive aspect for all types of lenders. In other words, your friends, your posts, your browsing history and your past purchases will all help companies come to the conclusion if they will lend you the necessary funds or deny your application.
Indeed, this will soon become the norm similar to how it already is in human resources. You better be careful the next time you share something really personal on your Twitter feed or Facebook page.
However, it is quite possible that the payday loan industry would decide to move away from this trend over fears of privacy. With these alternative financial services already receiving plenty of criticisms from public officials, consumer advocacy groups and non-profit organizations, payday loan companies may want to avoid being too controversial and simply rely on bank statements, job status and credit scores.
If it isn’t payday loan stores, it will be some other businesses that will rely on data beyond FICO scores. And this will inevitably become a normal part of any type of application, whether it’s justified or not.