Your social media profile may be hurting your credit score

In its third quarter report released last week, Facebook reported it now had nearly 1.8 billion monthly users. In that number Nigeria’s slice is 16 million users according to Internetworldstats.com. If we are to aggregate the total number of users on other social media platforms, billion may not be very far. To a layman, the numbers may just mean numbers, but to an advertiser and a financial institution, the numbers are very important.

The growth in the use of the internet and the increased possibilities it holds for businesses is changing the way many things are perceived. Many things include your individual participation on any social media platform.

Prior to now, they were just the place where people hook up with their friends – those they have not seen for a long while and those they are constantly in contact with, meet new people, dispense knowledge and share ideas etc.Those were the days.

Today social media has changed to such an extent that Instagram is about to give you the option of staying within the app and do all your shopping or Facebook now empowers you to not only post comments but stream live what you are doing. All of that is to keep you longer on the platforms. Hence many people are almost living their entire lives on the social networks.

Credit firms including bank and non-bank institutions are also disrupting their

operations. Rather than sit in their posh offices and wait for you to walk in with your heavy collateral and take a loan, they are now coming to you to find you in the only place where they are certain to get you – the social media platforms.

Often when they visit your profile on Facebook, or Twitter or Instagram or SnapChat it is not necessarily because they want to offer you a job rather to spy on you – especially if you had applied for a loan with them. Bear in mind that most credit firms particularly the non-banking institutions do not ask for collateral, but they will take higher interest rates and give you less than what you would have gotten from a bank. The reason they do not ask you for collateral is called ‘credit score’. They simply replaced the old inconvenient collateral with credit score.

A credit score is a numerical expression based on a level analysis of a person’s credit files, to represent creditworthiness of the person. Lenders use credit scores to determine whether you qualify for a loan, at what interest rate, and what credit limits. Your social media profile plays an important role in providing what your credit score rating is.

In Nigeria, credit services firms such as SocialLender are heavily reliant on your social media activities in order to make their decisions about granting your application. It is important to know how important this is so you can begin to correct some wrong impressions you mayhave built as a result of the manner in which you relate on social media. When you apply for loans in some financial institutions, one of the provisions could be that you should provide them with your social media profiles.

So what exactly will they be looking for? While on social media, one of the first things a lender wants to establish is your true identity and your employment status. The second thing they are looking for are possible red flags that shows irresponsible spending or fraud.

The red flags could come from your manner of communication; how you write or spell your words. Something as simple as typing your words in capital letter may indicate your earning power or education is not good enough hence it makes you unsuitable. FICO, a credit analytics firm which also developed a pilot project for rating customers in the US, noted that using a word like “wasted” can predict whether a person is going to repay a debt or not.

Some lenders also aggregate your friends’ behaviours and interpret as a mirror of your behaviour on the belief that people typically gravitates towards like minded people.