|Photo by Bill Strain / Flickr|
Most lenders, particularly larger American banks, follow these regulations and stick to traditional methods of determining your riskiness as a borrower. Newer and internationally based lenders though are increasingly making use of social media data - and not really those regrettable selfies you drunk-posted - to help guide their decisions on which candidates should be privileged to expose the lender to repayment risk. This might also be a reason to look into efficient remote desktop services.
Practices such as assigning you a lower level of creditworthiness if you have few, or only farflung, Facebook Friends; or judging your ability to repay a loan if your lose your job based on the quality of your LinkedIn connections; or even refusing to lend to you outright if you are connected through social media to anyone who has been late in repaying the lender; are becoming more common. Lenders say they feel these types of assessments allow them to expand who they consider lending to by being able to evaluate an applicant who may not have accessible credit or employment history. As Shakespeare penned, “You are the company you keep.”
Online discussions of these controversial practices are dominated by those expressing outrage at the perceived unfairness of being further judged for creditworthiness (beyond common credit, employment, and criminal background investigations) using newly added criteria, and remain noticeably absent of those suggesting that lenders’ wishes to protect their assets would appear reasonable if the tables were turned. As there are more loan applicants than available funds to lend, screening out the least desirable applicants is a common-place market-based feature of the American capitalistic economy that, as stated by both financial analysts and consumer advocates, is very unlikely to disappear and is logically predicted to greatly expand.
How to Stop a Speeding Train?
To prepare for the inevitable, regulation such as the following could offer additional protection to loan applicants while not forcing lenders to ignore useful data to protect their business.
Advance consent of the applicant is obtained. Then what? Delete, delete, delete!
Transparent availability of reasons for loan refusal is required. Knowledge is power!
Options for recourse against contested information, or mistakenly associated data with the wrong applicant, are developed. Unless you are the ONLY John Smith, right?
Author Bio: Maegan Pulman is a freelance IT consultant and a fast payday loans specialist. She is active in local and international IT events and is always on the lookout for the latest industry trends.