The precise formula for determining your credit score is information privy to the credit reporting bureaus (Equifax, Experian, TransUnion), and can vary between the different companies. Traditionally, the information on your credit report that determines your credit score is a mix of your payment history, amount owed, age of accounts, new credit, and type of credit used. But could additional lifestyle information, like the information we share on social media, become an additional tool that predicts our ability to repay loans?
The Consequences of Over-Sharing
While data from your social media presence is not currently considered when calculating your credit score, FICO CEO Will Lansing told the Financial Times that, “If you look at how many times a person says ‘wasted’ in their profile, it has some value in predicting whether they’re going to repay their debt.”
Most people have at least heard the rumors, if not heeded the warnings themselves, that potential employers look up job applicants on Facebook, Twitter, and other online platforms to get a sense of their character before making hiring decisions. While certain laws protect applicants against discrimination based on gender, ethnicity, religion, etc. the line becomes less clear when it comes to voluntarily-shared lifestyle choices that could display unprofessionalism, especially toward a certain career. For example, announcing you were arrested for a DUI might not look so good if you’re applying for a position as a driver. But do lenders really see and consider the information you post online when you apply for a loan?
The Online Impact
When an applicant with little or no credit history applies for a loan or their information must be verified, data from social media could be used to fill in the gaps and affect their loan approval.
A survey conducted by Microsoft of people in five different countries examined how people believed their online presence affected their reputation. Of those surveyed, 14% believed they had been negatively impacted by online activity. And out of the 14%:
- 15% believe it caused them to be turned down for a mortgage
- 16% believe it caused them to lose their health insurance
- 21% believed it got them fired from their job
- 16% believe it caused them to be turned down from a job
Whether or not these negative events were a result of social media content cannot be said definitively, but the self-reported beliefs tell us that incriminating social media content existed for these people, and that alone poses a problem.
Think before you post
Whether or not the future of credit scoring includes an algorithm that analyzes your social media content, it’s simply good practice to think twice before you share anything online. Assume that all information you share can be seen by others and that it cannot be deleted. Before posting anything, ask yourself if what you’re about to share could be misinterpreted or viewed negatively by a future employer or lender. It’s always better to be safe than sorry.
For safety reasons that can protect you from identity theft, avoid sharing personal information about yourself or your family members, including your children. It’s not hard to piece together where you live from the background of pictures, where you work, where you went to school, your maiden name (if applicable), and other information that can then be used to steal your identity and wreak havoc on your finances and credit. Protect yourself and your family by being extremely selective about the information you share on social media.
Also, be sure that your privacy settings are secure and thorough. Check your social media settings to ensure they’re consistently set to the strictest privacy settings possible. Periodically check yourself online, looking up every variation of your name to see what content is associated with it to ensure nothing inaccurate is floating around that could have negative consequences. Being proactive is the best way to prevent and fight against identity theft and inaccurate information. Remember that you have a right to dispute any negative information on your credit report, so if you do find that your online information has been used by another to steal your identity, you can fight the charges and dispute the information on your credit report.