Financial Creditworthiness via measuring social media activities?
It’s an undeniable fact that, banks, financial institutions and NBFCs continuously check credit scores and CIBIL scores; in order to gauge the creditworthiness of a person. Nevertheless, of late, the trend has registered a change like this traditional process frequently leaves out many individuals from the radar. In the same time, less than transparent methods and reference points used to calculate CIBIL scores, make many consumers unscorable’. As a solution, alternate credit scoring models have emerged; plus they’re more inclusive as compared with traditional methods of credit scoring. As far as the use of social network behavior is concerned, the Fintech space leads the way.
Most fintech companies concentrate on conducting a social network behavioural analysis in order to gauge the creditworthiness of a person. According to Shweta Jain, financial planner and founder, Investography; since the use of the Internet has grown numerous, banks and financial institutions frequently track social network behavior to check credit worthiness of individuals. Fintech lenders are active in this aspect to a great extent. They collect non traditional data from diverse sources and its volume is usually much larger than that of data from conventional sources. It could include multiple sources like phone usage patterns, payments and transactions, payment history of utility bills and IMEs between others.
New age credit scoring methods include a host of activities like collect data on the digital activity of a person connected to her or his telephone number make it far easier for digital lending platforms along with other marketplaces to access extremely detailed and dense data sets. In addition, since these platforms have details about a consumer’s cell phone usage; they may also access their social network usage and network to evaluate one’s creditworthiness. With info gathered from the profile of the individual on several social channels like Facebook, Twitter and LinkedIn among others, digital loan providers have an opportunity to in fact create a more accurate credit profile of borrowers and also understand their character to a great extent.
Insights and info derived from a person’s social networks are first used to verify the identity of the borrower and ensure whether the professional, personal and financial details provided by them are accurate. The technique utilized by them includes artificial intelligence and Machine Learning together with advanced analytics. AI algorithms are utilized to check the quality of connections with individuals who comprise part of your social network, which gives financiers a better insight as compared with traditional financial data, to help establish a credit profile of borrowers.
It might come as a surprise, but with the profile of borrowers, lending platforms also analyze Facebook profiles of their connections to see how stable and responsible they’re, based on their work history and credit profiles. Some lenders even access the patterns of borrowers buddies to check if any of them have already borrowed from the platform and after that obtain that person’s payment history to use it as a predictive indicator of the repayment ability of the borrower in question.
Also, professional platforms like LinkedIn offer a look into the quality of borrowers professional network and their job history to verify their employment history along with their identity.
Maintaining a social media profile and a strong credit profile
Your social media posts reflect your thought process. Choose your friends in the virtual world as carefully as you would choose friends in real life.
If you have a good employment history and enough stable connections in your professional network, highlight them enough to build your profile as a credible borrower.
Along with this, make sure to constantly review the history of your social media posts and get rid of posts, which may prove to have a negative impact on your overall profile.
Doing all this consistently and regularly before applying for a loan from a digital lending platform will improve your credit profile and increase your desirability and credibility as a borrower among lenders.
Rohit N Shetty is a Digital Marketer, having over 12+ years of experience in various domains.