First Federal Bank Blog

If you’re shopping for a loan, you probably know lenders look at data like your income, loan repayment and credit history, and debt owed. However, loan approval is sometimes based on more than these traditional factors. Lenders can also collect, “social data” to get a more complete picture of your creditworthiness. In the process, they may even scrutinize your social media presence and posts — so it’s wise to be aware of this possibility when applying for a loan.
 
What is social data?
 
Lenders typically rely on data gleaned from your credit history. However, if you have poor credit or little to no credit history at all, there may not be enough information available to assess your risk as a borrower — making it harder for you to get a loan. In situations like this, alternative data is an important tool lenders can use to determine your creditworthiness.
 
Alternative data can come from sources like your utility bills, rent payments, income sources, and bank accounts — information a potential lender might request from you. But according to an article by Florian Tanant for the online security company SEON, it can also be, “social data” gleaned from your online presence, especially your activity on social media networks.
 
How does social data affect my creditworthiness?
 
Lenders can use information from your social media and other online accounts as a factor in assessing your identity, your trustworthiness, and your borrowing risk level. Tanant states this could include looking at your job information on LinkedIn, making sure your IP address and email address don’t indicate a potential fraud attempt, or even making judgments about the reputability of the social platforms you use. An article for the Socialnomics news site notes engaging in positive online interactions and interacting with extreme political content could draw attention, too.
 
Socialnomics also points out using social data as a factor in loan approvals isn’t yet subject to established standards and regulations. So it’s unclear exactly how — and when — information gleaned from your social media presence would be incorporated into a loan decision.
 
What actions should I take?
 
It’s important to note lenders don’t generally have access to social media content that isn’t public. If you’re in the market for a loan and concerned about how social data could affect that, it might be worth taking precautions like you would during a job search.
 
Start by entering your name in a search engine to see what pops up. If you use sites like Twitter, Facebook, Instagram, and TikTok, consider making your profile private or limiting public information to the basics of your identity. Business News Daily writer David Cotriss recommends making sure you maintain some sort of public profile, as its absence could also raise red flags. Just make sure what’s publicly visible is positive, appropriate, and not offensive.
 
The role of borrowers’ social media presence in loan approvals is still taking shape, but it does have the potential to affect your finances. Taking precautions and protecting your reputation will help you minimize any risks to your loan application.