"Our view is there is a constant push by lenders to manage risk for their loans. They want more data to qualify the creditworthiness of the loan applicant," said
He said lenders are logging into
Lending Club, a peer-to-peer lending network based in Redwood, Calif., routinely uses social media to gather information about loan applicants but says the information would only be used to deny a loan if it raises questions about an applicant's identity.
"We don't use social media to make credit decisions. We do sometimes review online data to verify identification or prevent fraud," said
Lenders are not the only ones using social media. Collection agencies and lawyers use social media to track down people. Hiring managers also are using social networks to conduct reference checks.
Lenders, in general, are cautious of denying loan applications based on what they discover on social media websites because they run the risk of violating the Equal Credit Opportunity Act, which requires lenders to tell borrowers why they have been denied credit.
"The rule requires lenders disclose the top four primary reasons the loan was not approved. If social media is in there, it would be listed," said
Ms. Feddis said banks are required to monitor social media for complaints about the institution itself. If a bank representative sees a Tweet from a customer -- such as one about a job loss -- that raises eyebrows, he would probably inquire further. But the bank would not make a lending decision based on a Tweet alone.
Representatives at PersonalLoanOffers feel strongly that what anyone says in a social media setting should not have any bearing on their financial life. "Our position is we condemn the trend,"
"With social media, there is no process or path for borrowers to dispute incorrect items or invalid information that potentially prevents them from getting a loan they need."
(c)2014 the Pittsburgh Post-Gazette
Visit the Pittsburgh Post-Gazette at www.post-gazette.com
Distributed by MCT Information Services