You may want to think twice before you add a new friend on Facebook. It turns out credit lenders are using social media data to determine who qualifies for a loan.
At this point we know of at least three lenders using social media to determine who qualifies for credit and who doesn't.
It's a concept that never occurred to most shoppers.
Katie Pack is looking to buy her first car at Bill Luke Chrysler Dodge Jeep on Camelback, but she lacks credit history. The 19-year-old never considered that her buying power could be affected by her Facebook friends.
"My friends are younger and kids tend to make mistakes and party, hang out with the wrong crowd, that's actually something to factor in now and think about," says Katie.
"That's actually really surprising to even hear that."
Lenddo.com is one company using social media to scope out applicants. CEO and founder Jeff Stewart suggests looking at your Facebook friends like you would look at job references.
"Just like offline, online you want people who are responsible to be your references. They'll have a more positive impact," says Stewart.
"Your reputation, what people think of you in your community is going to become very important and that can be used to manage risks to get better service."
Right now Stewart's company only offers loans to people in Mexico, Colombia and the Philippines, but he says it would not be surprising to see big banks here in America using the same strategy. He says social media helps lenders get back to the basics.
"It's going back to, do people trust you, are you respected in your community, and that's where the foundation of good credit and good risk management."
Lenddo also looks at interactions on LinkedIn, Google, Twitter and Yahoo, but that their applicants give them access.
Katie says it's just one more reason to take caution when using social media.
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