With growing concerns that private information is valuable to the business world, we’re being warned against revealing too much online. But what if the social media that we use to publish our lives to, were to one day have an effect on our credit rating?
Germany’s biggest credit-reporting agency SCHUFA, recently sparked controversy when internal documents pertaining to a project they planned to fund were leaked to German media groups. German politicians, data protection activists and media commentators alike, were appalled by the proposal to determine the credit worthiness of an individual by mining social networking sites for information to be used for “identifying and assessing the prospects and threats” as well as “the current opinions of a person” according to Spiegel Online.
The controversial German project may only be conceptual and would of course prove difficult to get passed in reality but it does raise the question; what clues could your social media activity give to lenders about your credit worthiness?
Imagine a future where secured loans available to other borrowers become out of reach because Facebook, Twitter LinkedIn and other social networking accounts reveal sensitive information about your ability to pay bills on time? Whether it’s worrying you’ll be rejected for a secured loan or turned down for that dream job, the personal profile you create online could one day be public property.
For companies to base business decisions on your credit worthiness may not always be a negative prospect – if you have good credit and normally qualify for better rates on credit cards and secured loans it could work in your favour. Brett King – CEO of Moven – seems to think so. Maybe his ‘radical’ idea of a credit score built on consumers’ social media activity is merely a sign of the times. The investors who are confident enough to put $2.41 million into King’s startup CRED system certainly think so.
The basic concept is a proprietary financial credibility score based on Moven’s measure of individual’s day-to-day financial behaviour, producing real-time feedback that enables a better understanding of financial health. King maintains the primary aim of CRED is to allow consumers to check whether their credit score is going up or down. He claims it benefits customers with the CRED reward ecosystem meaning if a customer successfully introduces a new customer to Moven, they’ll be rewarded with better fees so better secured loans may come about as a result of social media activity after all.
At the moment applications for secured loans and mortgages, credit cards and other forms of borrowing cannot be jeopardised by a few throw-away internet exchanges. But for consumers in an increasingly technological world, our digital footprint could mean that in the future our spending and borrowing data could become available for analysis. According to Euromonitor, British consumers are predicted to buy goods and services on credit worth £323.3 billion this year. This increased willingness to apply for credit online also increases the scope for lenders to determine your suitability and affordability for all manner of borrowing from car loans to larger secured loans.
Regardless of your opinion about the ethics of using social media to gain financial information, it could be a sign of things to come so remember to check your security settings and be careful what you share!