Micro-lenders turn to social media when conducting credit checks

keys with houseplan and dollar signWhen you need a loan to purchase a car, house or other large investment, banks and credit unions run credit checks to learn your FICO credit score, and how risky an investment you might be. At that point, the bank or lending institution will determine whether you are worthy of receiving a loan, and at what interest rate. The better your credit score, the better your chances at getting a reasonable interest rate.  But for those who have poor credit scores and either can’t qualify for a loan through traditional lending institutions — or those who only qualify at an astronomical interest rate — more and more opportunities are becoming available to you. Micro-lending firms may still be willing to work with you, because they are willing to consider different types of background checks than traditional lending companies. Traditional credit checks will look at how much debt you have, and whether or not you’ve historically paid on time each month. (If you have, you are likely to be deemed low-risk, and will have an easier time obtaining a loan.) They also check for bankruptcies, employment history and any court proceedings. Meanwhile, these smaller micro-lending institutions look at more than just standard credit checks to determine if an individual is worthy of a loan. More and more often, they are combing through an individual’s LinkedIn page, Twitter feed or Facebook page to determine their employment history, the quality of the person’s social network, and the gadgets the individual is using to access the social networks — all things that allow them to determine whether or not it’s worth lending to that person. (The downside is that if you do not pay the loan back in a timely manner, social media is now an additional way debt collectors can harass you for the money.) Having the opportunity to borrow and pay back a loan in a timely manner can help raise an individual’s credit score, which will allow them more opportunities not only in lending, but also potentially in employment situations in which credit checks are conducted. For those who have a hard time securing traditional loans, micro-lending institutions may be a way to accomplish your needs. What do you think of this phenomenon? To learn more about how credit checks can affect your employment, contact Mind Your Business today.]]>

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