The fine line between your personal life and your credit is being crossed as some lenders are looking at social media as one of the methods to determine the credibility of applicants.
Personal lenders such as Lenddo and the peer-to-peer network Lending Club gather information on people from social media to apply in conjunction with that person’s loan application to determine their trustworthiness. While Lenddo factors in a person’s habits and activities on social media to determine if he or she is worthy of a loan, Lending Club only uses the information to help fight against fraud.
Lenddo will look at how long your social media account has been active, the number of friends and followers you have, and most importantly, whether or not any of your friends on social media have an account open with Lenddo.
If you do have a friend who uses Lenddo, the company will check your friend’s account history. Depending on whether they are in good standing or not could either help or hurt your chance at being accepted for a loan. If your friend has poor history, it will be factored in negatively. On the other hand, if a buddy is in good standing with a loan, it can help improve your chances of being approved.
Jeff Stewart, a co-founder and CEO of Lendoo stated, “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.”
In today’s digital world, the majority of people have at least one social media account open. As reported by Statistic Brain, 58 percent of people polled in America use social media, with 98 percent of adults between the ages of 18 to 24 using social media. They also reported that there are approximately a total of 1.4 billion users on Facebook worldwide.
Steps to present the best you on social media
Clean up your social media accounts if you are serious about taking out a personal loan. Avoid profile pictures that contain anything that may appear offensive or inappropriate.
Also, untag yourself from any photos you feel could jeopardize your credibility. If you still have pictures of your keg stands from college, it’s time to either delete them or to change the privacy settings so that the pictures are only viewable among friends.
Minimal activity on social media could prevent you from getting a small business loan
Certain lenders can also view social media accounts for small businesses, as social media activity can help them determine your loan worthiness based on things like consumer reviews (on sites like Yelp) on your social media accounts.
The only problem with social media is that people have the ability to skew a lender’s perception of a business. Small businesses who want to appear credible to a lender can create fake accounts on Facebook, Yelp and other social media platforms as a way to give the illusion they generate business and are received positively by their customers. Therefore, a company may be able to trick a lender into appearing as more credible for a business loan.
What small businesses can do to improve their social media profiles
Just like an employer can take a peek at your social media accounts, lenders (outside of Lenddo and Lending Club) may also check you out on Facebook or Twitter. Whether or not a lender factors social media into the approval or denial process, it’s a good idea to look as polished as possible on your social media.
Small businesses who want to improve their image should consider the following tips before applying for a loan from a lender.
- Create a social media account on all relevant social media platforms (if you have not created any already).
- Post quality pictures of the entire business.
- Address any concerns or reviews on popular websites where people can critique your business.
- Respond to customer comments.
- Try to be active on your social media accounts.