We all know that how we use credit cards or repay loans will impact our credit scores, but could the way you use social media also play a role?
While it may seem a ridiculous notion, credit reporting bureaus overseas may be reviewin individual Facebook or Twitter pages as part of determining their creditworthiness
A 2017 investigation by Privacy International into fintech reported that some lending apps in Kenya were using M-Pesa for mobile money transfer. This platform was revealed to collate data like borrower’s text history and how often they called their mothers, potentially using this to make lending decisions.
The most glaring example comes from China and its social credit system, in which its citizens are ranked based on their interactions as well as transactions. This includes the frequency of which they consume fast food or how they manage their social activity.
While this level of individual monitoring may not hit Australian shores, countries such as the United States have begun considering letting lenders investigate more than just its citizens history with credit products to determine their creditworthiness.
The use of alternative data in credit underwriting has picked up steam in the US. In this case alternative data refers to a focus on cash flow, such as paying rent, utilities and bills on time, and general bank account management. Government experts have encouraged its benefits in helping to bridge the gap between historic racial inequities in the credit scores of Hispanic and Black consumers compared to White consumers.
This is a similar system to Comprehensive Credit Reporting that has been adopted in Australia, in which positive events are recorded on your credit file, not just adverse ones. But could the use of alternative data in credit underwriting expand into social media usage?
In the US, lending companies such as LendUp and Moven were reported to have checked potential borrowers social media to see if they had posted about losing a job on Facebook, or how many friends the borrower had, to help determine whether to lend to them.
A Forbes article noted that in 2015, Facebook patented technology for loan approvals based on user social connections. A loan application would investigate the credit rating of the applicant’s social network contacts, stating “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.”
While this technology was never rolled out, it’s worth remembering that these tech giants all have the capacity to access your social media data. Whether or not they do so to determine your creditworthiness is yet to be seen in Australia.
Further, in a statement regarding Facebooks ‘Actionable Insights’ tool, which may share data about users’ mobile devices to telecoms, a Facebook Spokesperson noted that “we do not, nor have we ever, rated people’s credit worthiness for Actionable Insights or across ads, and Facebook does not use people’s credit information in how we show ads.”
Are Australian credit reporting bureaus looking at your social media?
This level of credit monitoring has thankfully not been reported in Australia. Currently, your social media does not play a role in determining your creditworthiness. In fact, there is a rather large list of what does not affect your credit score that may be worth reviewing if you’re still unsure.
While credit bureaus have kept their reporting systems under wraps for some time now, we still have an idea of what positive and negative information does affect your credit score, including:
- Money you borrow, including loans and credit cards
- Your repayment history
- Credit applications
- Debt agreements
If you’re looking for ways to boost your credit score, there are more important factors at play than your social media. Consider paying down your outstanding debts or ensuring all your bills are paid on time before you start deleting your social presence.