The introduction of new AI-driven systems and Big Data analytics have begun to transform various aspects of the financial services industry across the globe. One of its most critical applications in the finance sector has been to add more accuracy and depth to determine the credit score and risk associated with lending funds to individuals or businesses, as even a minor increase in accuracy could be the difference between being rejected or qualifying for a loan for a customer or small business. In their search for more data to feed into systems to determine creditworthiness, companies have begun to utilize social media profiles to add more depth to their analysis.
Social media accounts for small businesses are particularly useful in this regard, as audience engagement, good reviews, and large followings can provide good indicators of the health and growth of a business. Banks and online lenders can see your active social media profile and positive feedback from customers acts as a strong indication that the business is doing well, and gives them confidence in the company’s ability to pay back any loans provided. Showing outstanding customer service to customers on your business’ social media channels is also a sign of your seriousness with respect to the venture, and can help potential lenders determine your creditworthiness with greater accuracy than just the use of financial history, which might be short or misleading.
For individuals as well, social media as a source of information about one’s creditworthiness can complement their financial history. Young professionals or those new to the financial side of things often lack a comprehensive transactional history to qualify for credit under conventional scoring metrics. A report by the Fair Isaac Corporation (FICO), one of the US’ most relied-upon credit rating agencies, indicated that the use of social media data could reliably identify millions of more consumers who should qualify for the credit. Using alternative data sources to buttress existing credit data to provide an accurate score has allowed TransUnion, another US credit rating agency, to approve an additional 24% of consumers for car loans.
This new method to determining creditworthiness has reached India as well. Various new-age fintech startups are looking to leverage such alternate sources of information such as cellphone billing records and social media profiles. This approach is particularly useful in the country as conventional credit-determination relies very strongly upon financial history, and many young professionals and others in India do not qualify for credit due to their short credit history. These companies are using cutting-edge AI-driven Machine Learning algorithms to process all this information in real-time, giving an nigh-instant credit determination that adds convenience and accuracy to the conventional process. Once the credit rating has been determined, these startups are offering unique and innovative products over and above conventional loans, such as allowing customers to buy products, and pay the cost in EMIs to these startups. If you’re looking for a loan, it might be a good idea to clean up your Twitter feed or Facebook page and find the right platform for your credit needs today!
The adage that one is judged by the company one keeps will ring truer than before when social credit scores begin to become more widely used for assessing creditworthiness. Most entities using social media being evaluated for their credit scores will be judged by the people on their networks, so be careful and ensure that you don’t end up having unscrupulous or indebted friends.
Whether it is your LinkedIn, your Facebook, your Twitter, or your Instagram, every major social network is likely to fall under the scanner of these social credit scoring methods. You won’t be able to keep one profile ‘clean’ and expect it to work if your other profiles throw up warning signs. In fact, obvious disparities or attempts to make one profile seem clean would likely be suspicious.
Disruptive, aggressive, or offensive posts on social media platforms are unfortunately all too common, and such behaviour is often ignored or tolerated out of a lack of options. However, such behaviour is likely to be considered to be a negative factor in determining your creditworthiness. Long-drawn out social media fights and tussles would imply socially irresponsible behaviour, which would make you more of a credit risk.
Lots of positive engagement on posts, whether through likes, positive reactions, or laudatory comments, would make you out to be a popular individual with an active network and connections, implying that you would be a low-risk person to lend to. This is especially useful for companies, as good reviews and a large following would improve the impression that your brand’s social media profiles give.
New-age Fintech companies are using cutting-edge AI-driven Machine Learning algorithms to process all this information in real-time, giving an nigh-instant credit determination that adds convenience and accuracy to the conventional process. Once the credit rating has been determined, these startups are offering unique and innovative products over and above conventional loans, such as allowing customers to buy products, and pay the cost in EMIs to these startups. If you’re looking for a loan, it might be a good idea to clean up your twitter and find the right platform for your credit needs today!
Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of the publication