Online profiles searched for spending habits and debt problems

Money lenders are peering into the Facebook and Twitter profiles of would-be borrowers to look for evidence of debts or dodgy spending habits.

Lenders trying to assess the creditworthiness of their potential customers are looking beyond application forms to social media sites, as well as using extensive Google searches., a new consumer finance firm, said this week it was improving its credit decisions by monitoring customers' social media activity.

Its application form now asks for an applicant's Facebook and Twitter user names.


Chief operating officer Mark Hannay said the online checks allowed the company to make more accurate and reliable credit decisions. He said it required the consent of the customer.

"We like to see a well-rounded historic Facebook or Twitter profile as part of a potential customer's digital footprint. This not only helps from a fraud point of view, suggesting the person is real, but also provides us a rich seam of data to dig further and make a better lending decision."

He said checks could include data matching, such as determining the person did have the job they said they did, or looking at other posts about lifestyle choices or spending habits.

No one has yet been turned down for a loan on the basis of what's been found on social media, he said. But he wouldn't rule it out if there were posts about things such as being made redundant or gambling.

He said building a snapshot of who a person was friends with would also help to prevent fraud. "We don't feel that a credit report for example tells the whole story. The more a customer shares with us the better picture we can get of them and make a better lending decision for the benefit of both parties."

Mortgage broker John Bolton, of Squirrel, was not surprised by the move. He had recently talked to a software developer who was working on a system for lenders to use social media to find customers in arrears.

"The reality is whatever you've got on the web is public information. You need to be a bit careful."

He did not know of any banks that used Facebook or Twitter as formal parts of their mortgage approval process but he expected his customers would be Googled. "They want to see what the person is up to."


Banking expert Claire Matthews, from Massey University, said it reflected the kind of lending that short-term consumer finance operations did.

But she said even those applying to mainstream banks should be aware lenders would look a lot wider than just at the loan application form.

"Banks don't rely on what people tell them because people 'forget' about a credit card or a hire purchase."

Telecommunications Users Association chief executive Paul Brislen said it was a bit cheeky of lenders to broaden their sights to social media. "Surely they have enough information already, with the credit checks they do."

He said it was a tricky issue from a privacy point of view. "Everyone is happy to share information publicly, until they realise that they're sharing it publicly with everyone. That can be where trouble sets in."

People could hide things by adjusting their privacy settings but Brislen said Facebook changed its settings so often that some users had stopped trying to keep up.

NZ Bankers Association spokeswoman Karen Scott-Howman said banks did not look at social media to work out whether to lend.