Can social media impact your credit score?
A good credit history is generally the most important thing when applying for a loan, but some lenders look at social media.
With all the buzz about Facebook’s questionable approach to privacy, it’s only wise to wonder how information on social media could be used by companies, specifically lenders, to assess your application.
As a general rule, it won’t impact your credit score directly, but it’s still worth giving the idea a thought before applying. Let’s dig deeper.
Can my social media activities affect my chances of getting a loan?
Let’s get one thing out of the way: if you have a long credit history, a good credit score and are applying for a loan from a traditional lender (e.g. a big bank), you don’t need to worry about social media.
When you apply, traditional lenders usually carry out a credit check with one of the three main reference agencies (Experian, Equifax and TransUnion), none of which, at the time of writing, go anywhere near your social media accounts to compile your credit report.
However, some lenders complement that with a different approach, using big data to try and establish how likely you are to pay them back. In the following cases you may end up with your lender digging into your online life:
What’s the deal with big data?
At this point, you may be wondering what big data has got to do with anything and why lenders would be interested in the pictures of your meals or anything else you post on Instagram.
Generally, when you hear about “big data”, people talk about the whole lot of information that’s available on the Internet about who you are, what you like and what you may be interested in buying. Loads of it is on social media and is used daily to target the advertising you come across.
Lenders can potentially use that to verify your claims and to cross-check the information you’re providing. Do you appear to have an over-the-top lifestyle? Does your Linkedin page confirm your job title? Does it look like you can afford loan repayments?
Can social media help me to get a loan if I don’t have a credit history?
It might, in some cases. FriendlyScore, for example, is a London-based startup that provides a new kind of credit score based entirely on big data and artificial intelligence.
If you don’t have a credit history, it may help you get a loan because it looks at other things than those checked by the credit reference agencies.
All things considered, the use of social media to assess applications is a bit of a mixed bag: on one hand, it may grant trustworthy people who don’t have a credit history easier access to credit, but on the other, it may also lead to more applications rejected for unclear reasons. Until it becomes more widely used, much remains to be seen.
- Check your privacy settings. If you’re posting something that’s only meant for your friends, make sure you’ve got the right privacy settings.
- Be extra careful with Twitter. It doesn’t have any private profile option, so you don’t really want to write anything there that you wouldn’t be comfortable with if your lender (or your boss, for that matter) read it.
- Research your lender. You may be able to gather some basic insight on how it assesses applications.
- Read the small print. If you’re asked to authorise access to your social media accounts, make sure you know exactly what you’re giving permission for.
- Don’t lie during the application process. That’s a general rule that’s always been valid. Social media has only made it easier to verify information.
- Don’t post stuff you aren’t comfortable with sharing. Especially on social media where everything you do is public, such as Twitter or Linkedin.
- Don’t apply for financial products using your Facebook profile. If you can’t help it, go over your profile and try to get rid of anything a lender may not like.
Compare personal loans
The bottom line
In most cases, you don’t need to worry about your social media activities when applying for a loan and there’s no way it will end up on your standard credit report. However, some lenders may use big data to evaluate your application, especially if you don’t have much of a credit history.
In general, if you’re posting something you’re not entirely comfortable with sharing publicly, double-check your privacy settings and make sure only your friends can see it. Lenders aside, employers are known to check future employees’ social media all the time, so it’s really not worth the risk.
Finally, times are changing, fast, so it’s perfectly possible that lenders will, in time, start to look at more than just the traditional factors.
Frequently asked questions
Read about how different factors can affect your score
More guides on Finder
What is Compound Finance?
We explore how to use Compound Finance for lending and borrowing.
What you need to know about getting a mortgage if you’re buying or refinancing a farm or farmland, including the factors lenders consider when you apply for one.
How much deposit do I need for a commercial mortgage?
Find out how much deposit you need if you’re taking out a commercial mortgage, including the factors lenders take into account, and how to get the best deal for you.
10 ways to improve your credit score
The best methods for getting your credit rating in top shape, and boosting your credit score.
Frequently asked questions about Finder Credit Score
Find answers to any questions about your credit score and report.
Sole trader loans
Find out how to get a loan if you work for yourself, including which lenders offer business loans for sole traders.
Commercial bridging loan
Everything you need to know about commercial bridging loans. We look at when they’re useful, how they work and what to be aware of before taking one out.
Molo Finance mortgage review
Discover whether a buy-to-let mortgage from digital-only lender Molo Finance could be suitable for you.
Compare residential bridging loan rates
Everything you need to know about residential bridging loans, including what to consider before taking one out, what they can be used for and their pros and cons.
Mortgages for students: Buy-for-uni
Discover how you can use buy-for-university mortgages to buy property as a student.
Ask an Expert