Could Facebook Friends Affect Your Credit Score?
August 29, 2013

Could Facebook Friends Affect Your Credit Score?

It is somewhat of an enigma wrapped in a riddle wrapped in a mystery as to what exactly determines a credit score. This is because there is the FICO — the most widely known type of credit score — and this is the updated version of the Fair Isaac Corporation scores.

It is the one used by mortgage lenders, but the issue becomes more complicated as the credit bureaus such as Equifax, Experian and TransUnion all have their own scores. For the record Equifax calls theirs ScorePower while Experian is dubbed PLUS. Each of these credit bureaus sells a VantageScore.

If you aren’t confused by this point, consider that the FICO and VantageScore each range from between 300 and 850. Unlike a 100-point scale, it is thus hard for some people to understand what it means. There is also debate on what factors into raising or lowering a score.

There is no shortage of sites that try to explain this, but many are dubious — and some are outright frauds.

Now this week, CNNMoney reported that a handful of tech startups could use social data to determine the risk for lenders! In other words, according to this story, some financial lending companies are looking at social connections as an indicator of a person’s creditworthiness.

One company cited in the article is Lenddo, which tracks who you might be friends with on Facebook or other social media sites. Have a friend that is bad at paying back loans that can somehow affect your credit score! This gets worse if you frequently interact with so-called deadbeats on social media.

“It turns out humans are really good at knowing who is trustworthy and reliable in their community,” said Jeff Stewart, a co-founder and CEO of Lenddo told CNN. “What’s new is that we’re now able to measure through massive computing power.”

But it isn’t just Facebook that can be tracked online to determine one’s credit history.

The article on CNN Money noted that German-based Kreditech utilizes an 8,000 data point scale that aggregates data from eBay and Amazon as well. Moreover, when applying for a loan it determines how people fill it out — type in all caps and you could be knocked down a couple of points.

All this is in a word: disgusting.

As someone with excellent credit and virtually no debt, I find it disturbing and moreover disgusting that factors such as my spending habits on Amazon should be considered. Additionally, what does the credit scores of my friends have to do with whether I will pay my bills?

As for Lenddo, it should be noted that it only has 250,000 members and only operates in the Philippines, Colombia and Mexico — so it is hardly close to being a bench market for credit bureaus or credit ratings. The worry is that the other credit rating watchers will take notice.

Shouldn’t credit be based on reasonable factors such as whether one has paid his/her bills, income to debt ratio and savings and investments? This seems almost too simple — but so would a hundred point scale. The truth is that this works to the lenders’ advantage to make it confusing.

Make it too easy and hey — people might get fair loans with reasonable interest rates and not be buried in mountain of debt, have a house they can’t afford and you know… bring down the whole economy when the housing market collapses. Not that we could ever expect that to happen… again.

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Peter Suciu is a freelance writer and has covered consumer electronics, technology, electronic entertainment and the fitness sports industry for more than 15 years. In that time his work has appeared in more than three dozen publications including Newsweek, PC Magazine and Wired. His work has also appeared on,,, and Peter is a regular writer for

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