With the vast amount of information provided by users on social media websites, it’s no surprise that companies are starting to figure ways to not only market to us, but also use this data to evaluate our risk as borrowers and our finances.
There is a strong correlation between how we behave personally and how we behave with our finances. The people we spend time with, our shopping habits and even our location data can now be incorporated into our lending profile.
But is this something we should be comfortable with, and what can we expect for the future?
The act of collecting and analyzing the phenomenal amount of information compiled from our online activity is known as “big data.”
Big data is still in its infancy, but early developments show the potential to accurately predict consumers’ lending risk, even without prior credit history. This could lead to affordable loans for millions of people who would previously not have qualified. Your social media profile could even boost your chances for obtaining a loan if your credit score is less than stellar.
Fraud prevention is another one of the key benefits touted by social media investigation companies. It is extremely difficult to fake a realistic social media profile. Taking into account these data points allows these companies to quickly and inexpensively evaluate the quality of both consumers and businesses.
Despite the benefits, companies having this kind of access to our personal lives could be a serious violation of our privacy.
There is also a question of how long this data could potentially be used against us. Big data companies are currently required by the Fair Credit Reporting Act to delete the data they acquire on an individual every seven years. One of the most prominent of these companies, Social Intelligence, also claims that every background investigation they conduct is unique, but what if these policies were to change?
The entire industry sits in a legal grey area with little legal oversight. The Federal Trade Commission has declared for now that these practices do not violate privacy laws, but there remains a lot of anxiety that companies could abuse the information they’re being given.
Big data companies are developing newer and smarter algorithms to dig deeper into your personal history than ever before.
As social media becomes more ubiquitous in our everyday lives, it’s becoming increasingly more important that we carefully consider the kind of information we’re posting online. Recent studies have shown that as mobile technology continues to improve, so too does our inclination to over-share sensitive personal data.
More and more employers are already incorporating big data investigation into their hiring practices. It’s not unthinkable that in the very near future, your social media profile could also become a legitimate part of your credit score, or at least a measurement that’s given considerable weight.
Using our personal profiles, purchasing history and blog posts to determine if we’re a lending threat or viable employee is a trend that is likely to continue. If you want to get an idea of the kind of information different companies are collecting on you, check out AboutTheData.com.