Banks, mobile networks and insurers are snooping on customers’ social media profiles before deciding whether to offer mortgages or other deals.
Lenders have long used financial records held by traditional credit reference firms when assessing applications for loans, mortgages and credit cards.
These reports, produced by companies such as Experian, Equifax and TransUnion (previously Callcredit), show whether customers have kept up with repayments on existing debts and other contracts such as gas, electricity and phone bills.
Credit profiling agencies have sparked privacy concerns after claiming social media can be used to verify a customer’s identity and predict whether they will pay back loans on time
But new high-tech credit profiling agencies have sparked privacy concerns after claiming social media can be used to verify a customer’s identity and predict whether they will pay back loans on time.
FriendlyScore has worked with banks, car finance companies and mobile phone firms, including Carphone Warehouse’s iD Mobile.
Before it can dig through your social media profiles, you have to agree to give it access by setting up an account online or downloading its mobile app.
If you allow access to your Twitter account, for example, it will look at your followers and what you post online to gain an understanding of your interests.
With access to your Gmail account, it can monitor the email receipts you receive from online shopping to see how you spend your money. From LinkedIn, it can check you have been honest about your employment history and qualifications.
Sign up for the mobile app and the firm can also monitor your whereabouts via its GPS tracker to see the places you visit and where you live and work.
The app also has access to your contacts and advises you only to store the details of creditworthy friends and family on your phone.
How robots can find top loans
Would you let a robot select the best mortgage deal for your property?
A new generation of online mortgage brokers are doing just that by using artificial intelligence to arrange home loans.
The firms, nicknamed ‘roboadvisers’, gather information from borrowers via online chats before using technology to search the market for the best deal.
Firms such as Mojo, Trussle, Habito and Hooski offer this service. Andrew Hagger, finance expert at MoneyComms, says: ‘All providers still use the service of human beings to help potential borrowers complete their mortgage transaction, which will be a relief to many, as this is one of the biggest financial decisions of your life.’
But Mr Hagger warns that before using any broker, whether face-to-face, over the phone or via the internet, it’s vital to check that they cover the whole market and don’t exclude some lenders from their searches.
‘Choose the friends and family that you keep in your contact book wisely,’ it says on the app.
Another firm, Hello Soda, has worked with payday lender Peachy.co.uk, Visa Europe, debt collectors, banks and insurers to look at new ways of verifying customers’ identities online and predicting whether they will repay loans.
In promoting a separate service called ‘The Online Me’, the company says: ‘Every time you make a submission for a loan, a house or a job, someone is vetting your social profiles . . .
‘Companies across all industries are continuing to utilise social media and draw upon your online information to make (often incorrect) assumptions about you.’
Hello Soda says it will produce a report showing you what predictions companies are likely to make about you based on the data that is available online.
It claims: ‘You can then use this report to manipulate your online profiles to project the image that you want, preventing social media from hindering your applications.’
But if companies make incorrect assumptions from what you post online, it could lead to loans being rejected unfairly.
Andrew Montlake, director of mortgage broker Coreco, says: ‘I would be worried about lenders denying borrowers home loans based on what they have posted online.
‘Just because a computer algorithm says that someone who likes a certain TV show or shops in a particular supermarket is less likely to pay back their loan does not mean it will be true in every case.
‘It would be wrong to reject people for loans on the basis of sweeping judgments.’
So what can you do to protect yourself from this rising trend?
Think very carefully before allowing firms access to your social media profile in order to calculate your credit score. These companies may say their services can help people who do not already have a detailed credit history because they haven’t borrowed before, such as young applicants and those new to the country.
Stay safe: Keep your Facebook settings private, so that only close friends can see what you post
However, don’t forget that what they uncover from your social media habits might not paint you in a good light, so could also stop you getting a loan. Plus, watch out for websites that allow you to log in using your Facebook, Twitter or other social media accounts.
You may be unwittingly allowing them access to all kinds of personal data and contacts that are stored in those accounts.
Keep your Facebook settings private, so that only close friends can see what you post. Make sure nothing you say online contradicts something you have stated in a loan or insurance application.
Lenders and insurers check publicly visible profiles to make sure that you haven’t lied about your job, income, marital status or details of a claim.
Neither Hello Soda nor FriendlyScore could be reached for comment. Visa and iD Mobile say they no longer work with the firms and Visa says it does not credit score.
Speaking to Money Mail earlier this year, Loubna Bazine, chief executive of FriendlyScore said: ‘All of the data analysis is done by machines. No humans look at it. We then pass the company a score and a short report of our findings.’
Trade body UK Finance says: ‘Firms use a range of techniques to establish customers’ identity and are continually looking at new ways to make this more straightforward, within the very strict privacy laws regarding the use of personal data.
‘Firms are committed to lending responsibly and will consider alternative data that might enhance lending decisions by supplementing existing credit repayment history.’