Your credit score affects your financial future in a number of different ways, determining whether or not you get approved for a loan, what type of interest rate you can get, the necessity for a utility deposit, etc.
Within the next 10 years, some industry analysts have predicted that part of your credit score will be determined by your Facebook and other social media accounts.
Since the 70s, your creditworthiness has been based primarily on the payment history of your credit and loan accounts. Over time, a numerical figure representing how much of a credit risk you are came to be used by just about every lender and credit card company. Though the algorithms have changed in the ensuing decades, almost everything was based around how much debt you had relative to your credit lines and how often you paid your bills on time.
Starting in about 2006, credit reporting agencies started using social factors to help determine your credit score, but under the guise of what they call an “Account mix”. Holding one credit card, even one with a high limit and dutifully paying it off every month for years, was suddenly not good enough for an extremely high credit score. Credit score algorithms were created to take into account this lack of participation in the credit economy and dock you points for not having a mortgage, car loan and more than one credit card.
Still, this hasn’t been enough to prevent some people from gaming the system, making it appear as though they are more creditworthy than they really are. This is why the three major U.S. credit reporting agencies are looking into non-financial factors when determining an individual’s creditworthiness. One of these factors is your social media presence.
Already, China is setting up a system that works much the same as a U.S. credit score, but takes into account multiple other non-financial factors. The resulting score has a substantial impact on a citizen’s economic well-being. While nothing quite as draconian is in the works from private U.S.-based businesses, some lenders do take into account your Facebook friends when determining your chances at securing a loan.
Crawlers that search your social media profiles for certain words or phrases that could indicate money problems likely already exist, and they certainly do exist with in-house advertising platforms. You might notice that if you search for something specific online quite a bit, you’ll start seeing ads for it on totally unrelated websites. This same type of re-targeting algorithm can be used by credit reporting agencies and information compilers to knock your credit score down or pop it up a few points.
You can find your own credit score fairly easily, which was only made possible by an act of Congress, but it’s much harder to tell where exactly all of your information comes from. Hard inquiries (the type that hurt your credit, when you view your own credit report or score it’s a soft inquiry that doesn’t have any effect), and public records almost always get added to your report by third parties who already have the technology to get plenty of non-financial data about you. In the near future, we will probably see something similar from companies that have absolute control over your economic reputation.