Could your Facebook and Twitter profiles make it harder for you to get a loan?

• Loan companies increasingly looking at prospective borrowers social media profiles to determine if they are trustworthy and reliable
• The process can disadvantage borrowers if it reveals discrepancies between what their loan applications and what they share online
• For instance a loan applicant might claim to be employed but admit online that he or she was just fired
• Consumer advocates worry that some borrowers could be unfairly denied credit or be forced to pay higher interest rates

By Daily Mail Reporter

Published: 01:58 EDT, 10 January 2014 | Updated: 01:58 EDT, 10 January 2014

Loan companies are increasingly looking to social media data to determine the creditworthiness of prospective borrowers.

The approach is similar to how other organizations - such as prospective employers - already use social networks such as Facebook, Twitter, Instagram and Snapchat to check a person's profile and post for hints about who they really are.

Checking out someone’s online persona is already standard practice amongst start-ups that grant smaller loans and now larger financial players such as Fair Isaac, a major supplier of credit-scoring information, is also considering incorporating the data into their research on clients.

Loan companies are increasingly looking at borrowers social media profiles to determine if they will be creditworthy, particularly when it comes to subprime loans

‘There could come a time where certain social media could be predictive and we're looking at that, but it isn't yet,’ said Anthony Sprauve, senior consumer-credit specialist at Fair Isaac.

The loan companies investigating social media are currently focused on subprime borrowers, reports the Wall Street Journal.

The hope is that looking through someone's social media profile can help them decide if that person might be worth the perceived risk.

Social-media data can offer lenders some very interesting additional insights into potential clients, but can seriously disadvantage some borrowers if it reveals discrepancies between what they’ve stated on loan applications and what they share online. 

Organizations such as prospective employers already use social networks such as Facebook, Twitter, Instagram and Snapchat to check a person's profile and post for hints about who they really are

A loan applicant might claim to be employed but admit online that he or she was just fired. They might also allude to financial problems, or even disclose information that conflicts with data provided in their loan application form.

It's that sort of revealing information that fledgling lenders, some backed by the likes of Google's venture capital arm and top venture capital firm Accel Partners look for.

Consumer advocates worry that this increased attention to social-media profiles might increase the likelihood that some borrowers - including businesses - could be unfairly denied credit or be forced to pay higher interest rates. 

People could endanger their ability to get credit through thoughtless posts or even outright mistakes, like not updating a work history on a site like LinkedIn

A loan applicant might claim to be employed but admit online that he or she was just fired

Other concerns include lenders misinterpreting or failing to verify the information associated with a potential borrower's social-media identity, while fake or joke accounts could also hurt scoring.

Under the Fair Credit Reporting Act, if a consumer disputes his or her credit-history information, consumer-reporting companies must verify its accuracy. Companies using social media don't have to check that information. Users could also create accounts under false names to avoid this scrutiny.

Under federal law, consumers can challenge information in their credit files, forcing reporting companies such as Experian and TransUnion to confirm the information. People have various legal channels available to review information, correct mistakes, and remove items that are wrong.

But for now taking information directly from social networks is not covered, leaving consumers with little to no practical recourse.