Imagine walking into a bank, in the hopes of borrowing a little money for your business, and bringing your deadbeat ex-boyfriend along for the ride. You’ll be dressed in your finest, armed with a great credit score and professional credentials, and he’ll be dressed in rags, filling the lobby with cigarette smoke and his desperate cries for spare change.
What are your chances of getting said loan? Pretty slim, right?
That’s why most of us work hard to keep our friends out of our financial lives. However, some lenders are trying to integrate your social media contacts and your credit availability. Here’s the lowdown on the change, and what you can do to prepare.
The Old and the New
A formal credit score is made up of a combination of income and debt. If you have a great deal of money coming in balanced by a low amount of money going out, and if you have a long history of paying things on time, your scores are high. This formal credit score system isn’t likely to change in the near future, as it’s enshrined in laws like the Equal Credit Opportunity Act.
However, there are some modern lenders that are hoping to develop products for people who have less-than-ideal credit scores. If your business has tanked and you’ve drained your private accounts to cover the damage, you might need the help of a loan from a lender like this. Here’s where social media comes into play.
Newer lenders like Lenddo and LendUp parse your social media profiles, looking for an affiliation between you and deadbeats. If your contact list is stuffed with people who owe these companies money, or if your pages are filled with people who are unemployed, you suddenly have less clout. The idea is that like attracts like, so the more loafers you know, the more loaf-ish you might be.
It sounds harsh, but these companies might be onto something. And if their companies succeed, it’s possible that the idea may catch on. After all, they’re lending money to people most banks simply won’t touch. If they can figure out how to lend that money successfully, and they don’t lose their shirts in the process, perhaps other banks will begin to innovate and stretch, pulling in social media data in order to make their loan decisions.
How to Prepare
No one is suggesting proof of financial stability before friending up on Facebook or LinkedIn. In fact, if you did ask people to share their bank statements with you, it’s likely that you’d do your reputation a lot more harm than good. But following a few simple steps can help you to clean up your profile as much as possible (and these are the steps we’d recommend for anyone with a online reputation management problem, so they’re just good ideas all around).
- First off, make sure you have some sort of personal connection with each person that’s connected to you on Facebook. It’s all too easy to allow random strangers to enter your inner circle (and a study published in England suggests that about half of Facebook users accept friend requests from strangers), but it’s just not smart policy. Everyone on your list should be someone you’ve met in real life.
- Upping your time on LinkedIn and beefing up your connections there could really help to boost your profile. Connect with all of your colleagues, and your clients, and don’t be afraid to reach out to people you’d consider your superiors. These are the folks that are likely to have some sort of online clout that might rub off on you, if you’re connected.
- Finally, make sure your own social media profile is as clean and tidy as it can possibly be. This means no beer-related comments, no nude photos and no liking of unfortunate pages. All of these dings are common, and they tend to make you look a little less than stellar in the eyes of the authorities.
Reputation management companies can, at times, help with this sort of cleanup, but those who prefer a DIY approach can try online tools like SimpleWash. With a few clicks of the mouse, this program will delete any information related to a nasty keyword, and you have the ability to define what “nasty” means in your business. It’s a great way to start.
As I mentioned, these newer banks may not end up revolutionizing the way we get credit and access loans. But I don’t think it hurts anyone to be prepared and address hidden online reputation management problems. If your success may, in time, depend on your social savvy, it’s best to start cleaning things up now.
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