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Social Media Can Impact Your Credit Score!

By Will from Holland

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Credit rules your life, just like social media does (for most people these days). Now, you should know that your social media life could be ruling (and perhaps ruining) your credit. Be careful, and avoid becoming the focus of the latest "peer pressure" mentality* in lending!

Imagine this: Some of your social media friends don't pay their bills when they are due. Shortly thereafter, the cost of credit for you—the interest you pay on some credit cards and loans, and maybe even the amount of deposit you pay to rent an apartment—goes up. Your actual credit score with some credit reporting companies goes down, too.

Next thing you know, you're turned down for a job. You're not sure why. What you don't know is that your potential employer used your social media friends' credit problems as one reason not to hire you.

You also notice that the advertisements popping up on all your devices have changed a bit. You see ads targeting people with credit problems, and promotions for low-end products or services that you would never consider. What's up with that? These ads are also tied to your friends' credit problems.

You click on some of the ads and start clicking through to other websites aimed at people with low income or credit problems. Shortly thereafter, your credit score goes down again. Why? Because you visited these websites frequented by people who have credit problems!

Could this stuff actually happen? Unfortunately, it is happening to people right now.

Thousands of companies also use your credit to determine what advertisements and promotions you see. Thousands of businesses use the traditional major credit reporting agencies to determine the interest you will pay on loans, and even what you pay for products and services.

For companies to use your credit worthiness as a yardstick to make business decisions isn't necessarily a bad thing. If you have good credit, for instance, you normally qualify for better rates on credit cards and loans.

Because credit rules so much of your life, the major credit reporting agencies and their reporting practices are at least partially regulated and monitored by federal agencies. Major lenders are also heavily regulated.

But that's not true of a new breed of credit reporting entities and a new batch of companies that lend money, particularly to people with no, little or (supposedly) poor credit.

Here's a look at three of the main companies currently in this area:

  • Kreditech sells its own credit scoring system to businesses anywhere in the world. It looks at your data on Amazon and eBay, and up to 8,000 other "datapoints" related to you. For instance, "…your social online activity, your e-commerce purchases, your GPS locations, etc." according to the Kreditech website.
  • Kabbage is a new company that provides operating capital to small businesses who sell items on sites like eBay or Think that doesn't involve you? According to Bloomberg Businessweek Magazine, Kabbage analyzes business interactions that its customers make on sites like PayPal and eBay, and may even look at the games a customer may play online.
  • Lenddo, which currently only operates abroad, looks at your Facebook account when they determine your loan interest. If your friends don't pay their bills on time, your credit with Lenddo could be impacted.

What's wrong with this, if anything? New credit reporting approaches could be a great thing for consumers, particularly consumers with little or no traditional credit. But it is vital that the new reporting approaches are accurate, fair and regulated. Right now, there is relatively little oversight on companies like these. For instance:

  • How is it determined that the information used to rate you is accurate?
  • What happens if the information they have is wrong?
  • Is the company responsible to correct inaccurate information? Do they correct the mistake promptly?

Who knows?

So, if you care about your money, what can you do about this?

If you think you have little or no credit, or even poor credit, do not—repeat, do not—do business with "easy" finance places like "rent-to-own," "buy here, pay here," or payday lenders. Don't finance online with anyone you don't trust or know for sure is legitimate, or with businesses like the ones described above. Always talk to a credit union representative before financing anything! Many times, a person's credit isn't as bad as that person may think. A good credit union will tell you the truth about your credit and will suggest lending options that fit your unique situation.

Even if you believe you have good credit, slow down and always compare any loan offer with a credit union's offer. Many businesses that deal with people with good credit are beginning to use some of these new credit-reporting resources to determine what you pay. The only way to know that you are always dealing with a credit source that gives you the best rates is to have one trusted source to use for comparison to all other sources.

If you use social media or already shop online, be wary of what you post and wary of what you do online. Remember that virtually everything you do, post and say online is pretty much public information.

And if you don't know much about credit, why not learn a little more? Just head to our "Solo" tutorial.


*Quote by John Lawson from