Facebook Friends Could Impact Your Credit Score

Written by Andrew Forgotch
Last updated on August 27, 2013 @ 6:33PM
Created on August 27, 2013 @ 5:51PM
 

How would you like to be either approved, or denied, for a loan based on who you're friends with on Facebook? According to some experts it could sooner than you think, because some companies are already doing just that.

A handful of tech startup companies are already using social data to determine the risk of lending to people who have a tough time accessing credit.

This is is a change because typically lenders rely on credit scores, which look at payment history. They tend to avoid people who don't have one of those scores.

Now some companies are diving into social media to help them out. One company called Lenddo takes a look at your friends on Facebook and they determine if someone you're friends with has ever borrowed from them before. If they missed payments, or made them late,  that's bad news for you. It gets worse if they're someone you interact with a lot on social media.

Alison Welty, a West Virginia University student, told 5 News she doesn't like that idea. She mentioned she isn't responsible for how her friends handle their money.

"I have a lot of friends who I would consider friends, but we don't have the same interests," she said. "We don't do the same things. They're not bad people, but they have different values than me."

Critics say this method is risky for determining credit history.

As it stands this method is only used in Europe, and Central America.