Could your Facebook Posts and Tweets Affect your Credit?

Do you have a Facebook, LinkedIn LNKD, or Twitter account? How about dating sites – do you actively participate in those? If your answer to either question is, “Yes”, then you’re probably aware of what benefits you can reap from being active on social media sites.

People of all ages – yes, that includes your parents and your grandparents – create accounts on Facebook FB for a variety of reasons. They may do so to stay connected to family living in other states or abroad, to keep in touch with friends, to meet new people, or (if you’re running a company) to advertise your business’ products and services. Whatever the reason, social media has become a very convenient and effective tool for individuals to reach and keep in touch with other people.

Disadvantages of social media
In recent years, however, the uses of social media have evolved. It’s not just a medium for expressing yourself, staying connected with family and friends, and for advertising your small business anymore. It has also become a tool for employers to check on your professional and personal credibility. Expressing yourself freely with strong opinions on political, economic and social issues as well as posting pictures of your weekend with your friends could end up determining whether you get that job you applied for or not.

As crazy as it sounds – employers looking at potential employees’ Facebook accounts – there are far crazier disadvantages to participating in social media sites. Identity theft is among the disadvantages, along with identity fraud, credit card scams and other types of scams which usually occur to people who are victims of online data breaches and hacking.

Social media score vs. credit score
As if these aren’t reasons enough to make you think twice about creating your Facebook and Twitter accounts, there’s a possibility that sometime in the future, your social media reputation will help determine your creditworthiness and affect your credit score. Can you imagine banks and lenders basing your loan and mortgage’s approvals and interest rates on your social media reputation or “social media score”?

As suggested by the CEO of a payment processing service called WePay, checking and analyzing social data could be more cost-effective and more accurate in determining one’s personal history or in determining whether a particular business is legitimate or not (mainly due to Facebook’s and Twitters time lines). On one hand, this might be a good idea to combat cyber criminals and frauds, but on the other hand, what if the same process is used by banks and lenders to determine your creditworthiness instead of just running the usual credit check?

What would potential employers, lenders, banks and credit card companies be looking for? The photos and videos you post, as well as your general behavior toward a certain bank, utility company or credit company could all be potential factors in determining your social media reputation. Do videos of you binge drinking, chain smoking and partying impact your credit score? Maybe not, but these could potentially cause you to lose out on that job you applied for once your potential employer sees your behavior.

It’s not impossible for lenders to factor in your social media “influence” (based on your circle of friends, their general opinion about you, and your online activities) and financial data to come up with your “social media score” in the future. Some lenders do create their own custom scores after getting your traditional credit report and score from the credit bureaus.

Social media affects your credit score
Scary, right? Good thing these are just “possibilities” for the future—oh, hold on. In a survey of 5,000 people conducted by Microsoft, 14% of the respondents believe that the online activities of other people have had negative effects on them. The negative impacts included getting fired from their jobs, losing out on a job or the college they wanted to get into, being denied a mortgage, and losing health insurance. Of the total respondents, only 44% are aware that their online activities can have potential long-term consequences, even though 91% have taken steps to manage their online presence. That being said remember if you were indeed denied for a loan the lenders are now required to inform you what score they used to base their decision on.

You may have set your Facebook and Twitter profiles to private (only those on your friends lists can see what you post), but it doesn’t mean that your privacy is completely protected from third party entities. Your friends may share videos, photos or status messages about you to the public. Facebook and other social networking sites have always drawn the attention of privacy advocates due to their privacy policies, which include the collection, tracking, processing and distribution of users’ personal data.

Maintaining good credit
If posting status messages and sharing videos and pictures on social networking sites are going to affect your credit somehow, then it’s only rational to refrain from using social media at all  or at least be very cautious if you continue. Unfortunately, it’s going to be difficult to sway individuals from participating in social networking sites or to control what other people will say about you. (Keep in mind that 56% of the respondents on Microsoft’s MSFT survey don’t think their online activities will affect them at all.) However, you can take precautions to ensure that your online activities don’t affect your credit. The first rule is to think (twice, thrice, four times) before you post; the second one is to ask yourself whether you really want this information to be put out there for everyone to see. Even if you set your profile to private, your friend or kin can easily share that information to the rest of the world. The information could also be harvested by identity thief’s potentially damaging your credit in that You should also get into the habit of checking your credit score occasionally to know where you stand financially in case you need to apply for a loan, a new line of credit or a mortgage. Monitoring your credit regularly can give you an idea which activities are negatively or positively affecting your credit score.