The old adage “birds of a feather, flock together” has been given new meaning if you are looking to borrow money. There has been an afflux of tech startups that lend money based on new criteria, certain factors out of your control unlike your FICO score. Social connections on Facebook can now make or break your chances of being approved for a loan.
Usually it is hard to acquire an loan if you have little to no credit history but companies like Lenddo don’t only look at your FICO score to determine if you are a safe borrower. The loan approval process for Lenddo looks at the payment history of your Facebook friends to gauge if your loan should be approved.
Lenddo co-founder and CEO Jeff Stewart discussed the reasoning behind his company’s methods, “It turns out humans are really good at knowing who is trustworthy and reliable in their community. What’s new is that we’re now able to measure through massive computing power.”
If you interact with someone frequently on Facebook who is delinquent with their financial obligations your chances for approval are affected greatly with Lenddo.
Another similar tech startup Kreditech takes it to another level when processing a loan application. The approval process is based on 8,000 data points from many different areas. On top of Facebook, data is used from eBay and Amazon accounts to determine if an individual is a good borrower. The online application itself is another source of data points. When you spend time reading information about loans on the German lender site your chances for approval improve. Your chances go down however if you fill out the application in all caps or no caps, small minor details. Also where you apply plays a factor, creditworthiness can go up if a loan application is done on a computer at home or at your place of employment.
For businesses a company like Kabbage is an option if one is looking to expand. It takes only seven minutes for a company to receive funds once approved. Creditworthiness is based on PayPal, eBay and other online payment accounts to track real-time sales and delivery information. Linking Facebook and Twitter account to Kabbage is optional. But doing so increases chance for approval greatly. “Someone who’s paying attention to Facebook and Twitter channels to deal with customer service is more likely to be on top of other parts of their business, too, like inventory and shipments said Marc Golin, Kabbage chairman and co-founder.
Do you think social media should be a factor with borrowing money along with your FICO score? Looks like we will need to ask personal financial questions from old friends and associates before accepting friend requests in the future. For businesses however social media borrowing can help growth exponentially especially a new hot startup with little credit history.
-Dru Ashe (@ShottaDru)