By Jeanmarie Tenuto
Some prospective borrowers are voluntarily including their social media (business and personal) to financial lenders as part of the loan submission package. Although unregulated and not “officially” part of the risk analysis and evaluation process for traditional lending institutions, the power of social media profiles may strengthen (or weaken) a prospective borrower’s opportunity to get a loan. It is important to keep in mind that all profiles are public domain and remain in perpetuity. If you haven’t started already, now would be the perfect time to begin social media branding for yourself professionally and your business.
FICO (Fair Isaac Corporation) is the credit score evaluation company whose process is used by most lenders to gauge a potential borrower’s “creditworthiness.” Today, FICO does not include social media profiles. In addition, all U.S.A. financial institutions must adhere to fair lending laws and other regulations which currently do not factor how social media data can be used in underwriting. But one day, that may change.
From the perspective of consumer groups, there is a growing concern that the unregulated nature of social media and its possible practice by lenders could lead to denying loans or increasing interest rates, unfairly. On the other hand, advocates contend that incorporating social media into the application gives new, startup businesses that lack a track record, or businesses (entrepreneurs) that have bad credit history, a way to make up for those shortcomings by providing more information. Consider the data collected via social networks may say more about the borrower than the FICO score.
Allowing lenders’ access to social media accounts may improve the chances of approval by providing more data points to the lender. The use of social media in underwriting may grow over time and this is how you can best prepare for it today:
Social Media is a marketing tool for personal and professional branding.
Social media allows you the opportunity to communicate your expertise and the company.
The information that should be perfect on social media includes:
- Name, address, name of business, job title, etc. are consistent across all social media sites.
- Launch the social media accounts soon after the business launch so it corroborates the time in business.
- Increase social media connections personally and for the business profiles.
- Target type of connections of quality and seniority.
- Monitor the ratings and reviews of the business.
- Develop buzz about the business, its products and services on social media sites.
- Interaction with customers on social media should be often and well communicated. Manage conversations and complaints. All questions should get a response.