When I was a kid I always wanted to read minds. In fact, in the What Super Power Do You Have? quiz I took on Facebook, I think that was what it said was my gift. I just want to know what people are REALLY thinking.
So, FYI, lenders are using Twitter and Facebook and other social media realms to learn more about borrowers:
Casual comments between friends, status updates and photos can be a great way to communicate, but that information is also being dissected and analyzed, according to insiders in the technology industry, to give financial organizations greater accuracy in creating a credit profile for potential borrowers in addition to their official credit history.
“What (financial institutions) have found is if your friends tend to be good credit risks, such as pay their bills on time, you are likely to be also,” said Lorrie Cranor, a professor of computer science at Carnegie Mellon University specializing in privacy issues.
They cite the example of someone with a great credit score who loses his job and lets his friends know about it on Facebook. The credit score tells about your past behavior. Social media displays your current behavior and gives a better glimpse of your future behavior than your credit score does.
Jack Vonder Heide, a technology analyst who follows the banking and financial services sector, said the concept known as “social media monitoring” has emerged because the existing credit scoring system doesn’t always work anymore.
“A credit score advises a bank on how well you have paid your bills in the past,” said Mr. Vonder Heide, CEO of Technology Briefing Centers in Oak Brook, Ill. “But social media monitoring will tell a bank how likely you are to pay your bills in the future.”