Our readers tend to know the basics of applying to a bank or building society for a loan. Most people are aware that these organisations have to run credit checks to determine if there have ever been any missed payments and establish if there are any potential problems in lending money to particular persons.
It’s always been pretty straight forward, if you’ve never defaulted, chances are you’re good to go for another loan.
Since the dawn of social media, however, people are having to be a little more careful when applying to a bank for a mortgage or loan product. We’ve touched on this before, but many people are still unaware of the importance of having a squeaky-clean social media profile when approaching these mainstream lenders. This is because the banks are quite literally watching you and your behaviours to determine if you are a safe bet when lending money.
For years people have known that if they wish to borrow money in the form of a loan or mortgage, that banks will run a credit check. It’s fair enough, they need to know whether or not the person that has made the application is likely to be able to make repayments. But the rise of social media has taken things in a slightly different direction and has meant that banks now have another string to their bow when determining who to lend money to. Banks are now able to scour social media platforms, with the use of hi-tech software and profiling agencies, to check out people’s profiles. Social media, apparently, can give many clues and insights into a person’s hobbies, personality and interests and ultimately can provide the banks with valuable evidence with regards to what kind of a lifestyle is lived and whether or not this could prove costly to someone who has a loan to repay.
Take Facebook for example, it has two billion users worldwide and is the world’s biggest platform for people sharing memories and photographs. Many users say it helps to keep them in touch with people they tend not to see regularly and is a great tool for sharing special occasions with loved ones. But, just look at the advantages that Facebook gives the banks too. At the click of a button, someone in charge of deciding whether or not to accept a loan application can scour a person’s social media page and decide if the applicant’s lifestyle (which is showcased for all to see on social media) is worthy of a loan or mortgage. It’s crazy (It sounds silly but that Saturday night out where you had a little too much to drink and was a little worse for wear may just come back to haunt you!)
In all seriousness, banks are not looking to see who is the most miserable and are equally not looking to refuse loan applications to people who appear to have a good time, but they are looking for lifestyle clues which may showcase whether or not someone has a good relationship with money. If they see that a person is out every week and there is evidence of a person always out shopping, socialising etc then this may ring alarm bells and this may prompt more questioning and deliberation from banking staff before they decide to accept any loan application.
Twitter and Facebook
Of course there isn’t just Facebook that can be used to generate a picture of a person’s personality and lifestyle choices, Twitter is also a big platform that banks may use to check out what kind of things a person is into and the kind of life they lead.
Naturally, many people have questioned whether using these profiling agencies is legal and moral. From a legal perspective, if you are on Facebook there is nothing to stop anyone, or anything, seeing what you have consciously made available as ‘public’. They’re not doing anything wrong, they’re merely visiting a Facebook profile.
So how does this profiling work and why are the banks using it so much? First and foremost, people shouldn’t panic. This technology doesn’t just jump straight onto all social media without a person’s knowledge. You have to consciously download the app to your phone and only then will it be able to see a list of contacts and monitor your social media presence. There are many people that know their social media platforms won’t show anything untoward with regards their spending etc so are happy for anyone to have a snoop around if it helps get a loan application through quicker. In fact, some of these firms actually say that they can help get people a loan as they can track what people do and can highlight that a person is not a financial risk – people buy into this and before you know it everyone is being tracked without even realising it.
But some people really don’t like the privacy issue that comes with this technology, and in particular don’t like how the banks seem to have jumped on this opportunity to delve deeper into people’s lives.
The trouble is the more people that sign up for this kind of technology to be used, the more banks are going to utilise it to make their decisions. It will eventually get to the point where people who do not wish this technology to be used will be in the minority so will be instantly refused a loan as it will appear they’ve got something to hide. It’s a little like not having a credit card and this influencing whether or not you can get credit. For instance, some people still believe that if they don’t have a credit card or don’t use a credit card often, this should mean that the banks will give them a loan instantaneously as it proves that they hardly ever need to use credit to purchase things. In fact, the opposite is true. If a person is a rare user of a credit card, or indeed doesn’t own a credit card, this makes them a credit risk and this person will highly likely be refused credit – it seems backwards, but that’s just how it goes unfortunately.
Scarily, as well as being able to access social media, the technology can also monitor online receipts that come to email addresses. This means that every purchase a person makes the banks will get to see. They will be able to monitor the amount of receipts that come in and will be able to determine if the person spends too much, in their opinion. They will also be able to build up a clear picture of shopping habits and where applicants like to spend their money. Everything from your home, the car you drive and where you go to work will be known.
It’s all scary stuff but people need to be aware that this is happening now. We live in a digital age where everyone knows everything about everyone else’s business. It really is time to clean up the social media image if you are looking to apply for a loan or mortgage anytime soon. Whether you agree with this ‘spying’ technology or not, the fact is it is here to stay, so you may as well know about it and always bear it in mind.
*Next stop. The bank manager will be riffling through your bins with a hand-held scanning device seeing what litter you have thrown away and judging the food you eat as a basis for rejecting a loan application…you heard it here first.