Social media is the interactive means of communication where you can share with your information, ideas, and self-expression with the world. It is a way to stay connected with people both near and far. But what you may not realize is that social media accounts may also be used to make lending decisions based on what you post and how you run your accounts. Your innocent socially-motivated accounts may impact your ability to borrow money.
In Addition to Your Credit Report
When making a decision on whether or not to lend you money, lenders need as much information on you as possible. Your personal information provides lenders with data to help them make a decision as to whether or not you will be a credit risk and helps them decide whether or not they should do business with you. Lenders have used your credit report from the big three credit reporting agencies, Equifax, Experian, and TransUnion, for several years, but your credit report does not tell the full story. While your report is an in-depth snapshot of your credit history, it does not tell all. As social media accounts continue to flourish, lenders also want to take a look at what you are doing in other areas of your life to aid them in their lending decisions.
Alternative Data
The information from your social media platforms is considered alternative data and the credit bureaus want to gather this information and include it in your report. Currently, a few of the credit reporting agencies confess that they are using social media accounts as an additional source of data to supplement your credit history, so that lenders can make even more educated lending decisions. In fact, Experian recently introduced a new program called Social Media Insight to help lenders have a better picture of their potential borrowers.
While using your social media accounts to obtain additional information, lenders will still continue to use your credit history as the main source of information. Consumers, however, do need to be careful what they put out there for the public to see, as it will continue to affect your financial future.
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