It does this by going through all your online social communications and who your friends are. If your friends are slackers, prone to late payments, the companies assume that by keeping bad company, you are by extension a slacker as well.
Lenddo, the company profiled in this CNN Money report, goes a step further to assess whether you're an upstanding guy or gal as far as paying back a loan by seeing if any of your friends have ever failed or been late in a payment. On top of that, it also looks at how often you interact with this individual.
All of this is done by computers on the cloud. Yes, math. Very fast and smart math.
There are other factors at play as well:
- Applicants are asked to provide information from their eBay, Amazon, Paypal accounts. Even Facebook accounts. Businessses that apply for loans and give the loan companies access are deemed 20% less likely to be delinquent on their loans
- How much time you spent reading loan applications and agreement statements
- How you type in your information - all caps or not. Not sure what the reason is that affects applicants negatively.
- Your locations
- Your friends and social networks online
So, folks, time to friend churches, senators, and anything that looks good on your friend list and start yapping with them.
But that's not all. This could expand beyond just banks and loan sharks. Insurance companies, country clubs, colleges, etc. Even secret societies will all need your social credentials to deem your social worthiness.