Lenders to use social media to determine credit worthiness

by AB14 Aug 2015
Lenders could soon be able to access a borrower’s social media accounts to assess their credit worthiness for a loan, after a major social media platform was granted a patent in the United States.

Facebook was recently granted a patent in the United States for a system that would allow lenders to use an analysis of a borrower’s friend list in determining whether they should be granted a loan or not.

Included in Facebook’s patent application was a hypothetical where a lender could use the average credit score of the individuals an applicant is friends with on the platform, to determine whether to proceed with a loan application.

“[The lender] examines the credit ratings of members of the individual's social network who are connected to the individual through authorised nodes,” the application read.

“If the average credit rating of these members is at least a minimum credit score, the lender continues to process the loan application. Otherwise, the loan application is rejected.”

However, Rebecca Hona, a mortgage broker with buyers’ agency wHeregroup, says Australians can relax, as the system’s use of credit scores means it is unlikely to ever be rolled out here.

“Our system of credit reporting is quite different to what happens in America, in fact it’s almost the opposite, so I can’t see a system like that happening here,” she said.