Imagine having your recent loan application denied because of who you are friends with on social media. It might sound crazy but in fact there are some lenders that not only are reviewing your social media pages they are also asking you for your login credentials to Facebook and Twitter accounts as a prequalification checklist. Picture this: you apply for a loan and the banker asks for your pay stub, tax returns and Facebook password. Sounds a little crazy to me, but it is actually happening in parts of the country. My parents always warned me to be careful when selecting friends but this takes it to a whole other level!
Before you get upset and say that is crazy, let’s first look at a few facts about this. This is not something that your credit report or credit score picks up on (click here to see the real components of a FICO score). This is something lenders are using to evaluate your credit worthiness in addition to your credit score, income and assets. Having said that, I can already picture the day I read a blog of some self proclaimed “credit expert” that has a great new way of improving your credit score. It will probably be called the “social media credit improvement tip, the secret the banks don’t want you to know”, or something close to that. Don’t laugh! These are the same “experts” that not too long ago were telling everyone to close all their unused credit cards or to opt out of preapproved credit card offers and immediately these actions would positively improve your credit score! Mark my words. One day you will read about the social media credit improvement tip!
The theory to this whole idea is that birds of feather flock together, so if you hang out and interact with people on social media that don’t pay their bills this could give a lender to believe that you might not pay your future obligation with them and decline your loan application.
Not all banks are doing this and of course if you get asked this question you can decline and take your application elsewhere. But it just goes to show you that if you are on the borderline of getting approved for a loan you might be subject to new and ever changing ways of being evaluated. The best thing you can do is to make sure your credit score is not just good enough to get qualified, but move it into the outstanding range. Then you shouldn’t be subject to these new and other types of evaluation.
I hope you found this article interesting, but if nothing else at least I have given you a good reason to not accept the friend request from that guy that was in your third grade math class that wants to reminisce about the good ole days with you…I have to go now I have some people to unfriend.