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(WFLX) - Did your credit take a nose dive in the recession? Or perhaps you're young and haven't had time to build a solid financial history?
If you're looking to get a loan, you may want to start using Facebook or Twitter!
We found some financial companies are using social media to connect to their customers, even using it to evaluate if they're credit worthy!
For example, BMX biking is Adam Grandmaison's passion and business. He sells cycling t-shirts, hats and stickers on his popular Web site.
When his company started to soar, he applied for a small business loan to launch a new smartphone app. Problem was: "The loan company was concerned about the fact I have really bad credit," said Grandmaison.
So the lender hit the brakes on his application!
That is until Adam showed them his company's Facebook page with more than 100,000 "likes" and his Twitter account with more than 20,000 followers.
The loan company decided Adam's BMX business was worth the risk. "A strong social networking presence is that it really kind of acts as your currency in terms of it represents who you are online," said Grandmaison.
So can your online reputation really could mean money in your pocket. We found a number of new financial companies using social media as one way to evaluate applicants.
Start up company Lendup still reviews loan applicant's credit reports just like a traditional bank. But if a borrower agrees, Lendup also checks out their Facebook and Twitter profiles to get a sense of who they are. "How long have people had their account? How strong is their network? How diverse is their network? How much do they interact," explained Sasha Orloff of Lendup.
Lendup says it doesn't review pictures people post or groups someone "liked". "We don't look at anything that could be construed as discriminating against somebody for things, like race or religion or color or marital status or age," said Orloff.
On Deck lending uses review sites like Google and Yelp to check out small business loan applicants.
Consumer experts worry this trend could hurt people who don't use social media, want to keep their accounts private, or post fake info online. "There's a lot of potential for consumers to game that system and potentially for people who may not be creditworthy to appear credit worthy," said John Bryeault of the National Consumer's League.
The FTC is equally concerned and is watching the trend closely.
Could it be possible credit reports, the traditional gauge of "credit worthiness", are becoming passe?
Ninety percent of top U.S. lenders still rely mainly on a person's FICO or credit score to make decisions.
But could social media be factored into a future FICO formula? "We are always looking at different things, social media will fall into that, but right now it's still too early," said Anthony Sprauve of FICO.
Adam says his social media 'rap' was very predictive of his success, and the loan got his company's wheels spinning. "It's going super well, I mean, we're making payments on it, and it should be paid off in six months," said Grandmaison.
The FTC says it's important that anyone who is turned down for a loan is told exactly what information the lender used to make that decision, whether it's a credit report, employment history, or even information from a social media page. This gives loan applicants the change to correct any information that may be listed incorrectly.