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.
Clean up your friends list. Take off those you don't really know all that well. Having questionable friends on your list can affect you getting a loan if you need one.
Take into account all of your social media accounts as they can all fall under a social scoring method. So make sure that each profile is accurate and there are no warning flags.
No one likes a troll online so be sure to keep your behavior in check by staying away from aggressive or offensive posts. This type of behavior would be viewed as socially irresponsible and could negatively affect your creditworthiness.
Sites like Indeed, Monster, Facebook and LinkedIn all show some details surrounding your work history. Employers will match all those work details to your application so make sure it is accurate. You of course do not have to add this information to your online social media profiles but lenders may feel more confident in making a credit decision for you if it is. This is especially true if you have poor credit.
When it comes to sharing things about work, stick to the positive. Awards, promotions etc. You don't want to talk about needing a job or your boss/company in a negative light unless you are okay with lenders seeing it.
Having good reviews online is important whether you’re a business or an individual. They show a sense of responsibility and lenders value that. If you are business that is going to be looking to secure a loan at some point, start boosting up your positive reputation online. For individuals, positive reviews are important for you too. Your activity on e-commerce sites like Etsy or eBay can be looked at as evidence of your creditworthiness.
Take the time to show that you take your financial reputation seriously. Follow financial blogs and those Facebook profiles of authors, companies and leaders that encourage good financial habits.
In an effort to have more control over your own name, you should register it as an online domain. By doing this, you have control over what information surrounds your name.
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.