Why Facebook Profiles are Replacing Credit Scores
Source: Fortune
Getting a loan based on your credit score is so old-fashioned.
Over the last few years, a number of technology startups have created ways to assess credit worthiness that don’t rely on the traditional methods. Instead of analyzing credit scores, they look at mishmash of seemingly tangential information about applicants like their social network profiles, how often they use their cell phones, and whether they frequently send text messages.
... PayPal co-founder Max Levchin is one of the leading voices in the movement. In 2013, he founded Affirm, a company that combs through a wide range of sources to decide if applicants should receive loans. It looks at a person’s profiles on social networks to check for clues about how they live their lives and, in some cases, seemingly irrelevant information. For example, the company wants to know whether a potential customer has contributed software code to digital code libraries like GitHub.
... For now, then, the new age of securing a loan is very much in its fledgling stages with no indication of whether it will be successful. Given the hundreds of millions of dollars poured into the market, however, venture capitalists seem to see a future. Questions remain, though, over how consumers will ultimately react to seeing their social networks and mobile phones analyzed to determine whether they can buy that new car.
Read more: http://fortune.com/2015/12/01/tech-loans-credit-affirm-zest
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He continued: “People ages 18 to 34 are predisposed to hate banks. They want financing, but hate paying interest—hate the idea of being stuck in debt. But they’re willing to pay a fee upfront to split a payment over several months. We can underwrite people that the system sees as terrible risks with better clarity.”
Sounds like they're preying a bit on people who are a) convinced that new and computer-y must be good, and b) not really thinking it through. Because the way I read this, it sounds as though that "fee" to "split a payment" is pretty likely to exceed the cost of a regular loan (or just saving for a few months until you can buy that thing that you need)...
...and since they can't ask for your race or religion on the application, the next best thing is looking up your Facebook profile.
I'd say the chances of you being declined for a line of credit for being White but being in an interracial relationship and showing family photos on facebook is much higher than being White and having photos of blonde with blue eyes children on your facebook page, you'll probably get declined for other things like having tattoos or wearing a hijab as well.
I'm sure folks like Max Levchin are just loving this
This is one of the many reasons why I will never have a social media profile.
