Social media is known for socializing but it has morphed into much more than that. Nowadays, social media can have a very real impact on your credit and your ability to get a loan. Companies are looking to social media sites when making lending decisions. They are looking to confirm not only the identity of the borrower but to also determine creditworthiness.
FICO (Fair Isaac Corporation) has interest in making social media activity a determining factor when it comes to credit scoring. What does this all mean for you the consumer? You need to be concerned about your financial reputation on social media. We are already seeing financial impacts for people when it comes to employment. Most employers are looking to a candidate's social media activity as a part of their hiring decisions.
In addition, those with poor credit should be most concerned about improving their financial reputation on social media. Social media is becoming more and more the go to for creditors as a scoring metric for those with poor credit.
Before we dive into the social media side of credit scoring, we should discuss what goes into your traditional credit score.
When it comes to credit scores, the most popular is the FICO score. The range goes from 300 on the lower end to a max of 850 at the higher end. A credit score of 700 or more is considered good and if you have above 760, you have great credit. Now lets breakdown how they come up with a credit score. There are 5 factors they look at with a certain percentage assigned to each:
So what is the best way to manage your social media presence? Much of the advice that you would apply to managing your reputation is relevant here. This means watching who you have as friends, avoiding any profanity or questionable photos. It is also a good idea to keep your opinions and attitude on the positive side. What you do want to do is fill your network with solid and influential people and share content that puts you in a positive light.
Whether you are an individual or a business, your social media presence may be a factor when a lender is determining creditworthiness. With the vast amount of available online data, more and more lenders are seeing the benefit of considering social media as a factor for creditworthiness.
We are living in an economy where reputation is becoming increasingly more important. Even more important is your credit score and history. If you are suffering from poor credit, there is no better time to consider credit repair services. They will help you get your credit back on track and on the road to a better personal finance situation.