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.
Furthermore, 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 when deciding to make credit available for those with poor credit who would normally be denied.
Before we dive into the social media side of credit scoring, we should discuss what goes into your traditional credit score as of 2018.
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:
Now that we have given some background on what makes up your credit score, let's dive into what lenders are going to be looking at when it comes to your online presence:
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, keeping 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. Here are some things to keep in mind:
Whether you are an individual or a business, your social media presence will not be the main factor when a lender is determining creditworthiness, but it is becoming increasingly more important. With the vast amount of available online data, more and more banks and alternative lenders are seeing the benefit of considering it as a factor for creditworthiness. We are living in an economy where reputation is becoming increasingly more important, so take the time now to take stock in yours.