Skeptical Shopper: Can Your Online Life Ruin Your Credit?
By now, most people are fully aware of the dangers of oversharing online. We've heard horror stories of people getting the ax at work or stirring up strife with family members over their too-much-information status updates. But it gets worse: Reports now say that your social networking activities could prevent you from getting a loan for the house, car, or boat you've had your eye on.
Reports that banks and other financial institutions are using social networks like Facebook and Twitter for targeted advertising campaigns caused some alarm earlier this year. Essentially, to identify good credit customers, the institutions (sometimes in partnership with research companies) examine your profile information and activity, as well as your friends. Consumer blogs immediately posed the question: Could your social networking affect your credit?
Before you delete your Facebook profile (or just de-friend your deadbeat pals), though, look at both sides of the issue. Rapleaf, a San Francisco-based social media research firm, is one of the companies in question. On its blog, Rapleaf says that the data collected from social networks is used only by marketers--not by people who make actual decisions about your credit. According to the company, marketers are employing the data merely to target promotional offers on credit cards or advertisements for certain products.
Judging You by Your Friends
Okay, so maybe Rapleaf and its clients are using the data innocently. What about the other financial institutions checking out your profile? The bottom line is that some of these banks are judging your financial status based on your social networking life--and that's a bit scary.
Erica Sandberg, a personal-finance expert and columnist for CreditCards.com, says that creditors look at your network to see whether you would be a good credit customer. The idea is that if your friends pay their bills on time, so will you. Sandberg adds that banks even use social networks to expedite loan acceptance. If a lot of your pals are homeowners or are in good standing with their credit card companies, you may be approved for a loan faster than if your network consists of people who aren't.
Bank marketing departments aren't the only ones scrutinizing individuals' online activity. According to personal-finance site Bankrate.com, bill collectors keep an eye on Facebook, too. A collector who can't get hold of a debtor may look at Facebook to see if that person has alternate contact information listed. Bill collectors also monitor behavior: If you're posting about buying a new car but failing to pay on a college loan, the agency will take note.
Safeguard Your Profile
Thankfully, you can protect your social networking profiles from prying eyes. Facebook updated its privacy settings to give you more control over what you show publicly. Tweeting about your reckless spending habits? Lock up your Twitter account, as well. Accept friend requests only from people you know personally. If you must keep your profile public, be aware of what you post and how far it can spread. You never know who may be watching.