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Can Social Media Affect Your Credit Score? Delve Deeper to Know

Can Social Media Affect Your Credit Score?
While there may be cases where social media behavior of a person has cost him his job, his family, and relationships, many say that it will also prove as an important yardstick to determine your creditworthiness. If you are contemplating the viability of social media activity affecting your credit score, Buzzle will give you more information regarding the same.
Madhushree Kelkar
Could Social Networks Hurt Your Credit Score?
How will you feel if you go to a credit-rating bureau to inquire about your low credit score, and the authorities answer, "We have monitored every move of yours! Your credit score is low due to your Facebook updates, as you have checked-in at 25 expensive restaurants in a month. You have even tweeted that you have run out of cash and will soon require a personal loan to support your lifestyle." You will be flabbergasted to find out how your creditworthiness was based on innocent and fun comments you posted on social networking sites.
A couple of months back, one of the leading news vehicles reported that the credit reporting agencies are testing the integration of social media into the financial process in order to source information about an individual's creditworthiness and also establish his online identity. This means that even the harmless information you upload, can work against you in the complicated calculations of your credit score.
Imagine someone rummaging through your social networking history including those of your friends. Scary isn't it? Don't worry, currently none of the top three credit rating agencies, i.e., Equifax, TransUnion, and Experian have resorted to include your social networking activities in your credit score. However, in the near future, whether it's your Facebook, Twitter, or personal blogs, every word you may have said--taking the liberty of it being your 'personal profile'--could be thoroughly scrutinized to draw inferences about your creditworthiness and to judge your personality. Let us explore a few more points regarding social media activity affecting credit score.
Essential for Effective Risk Management
Research Under Progress
If you thought that by only paying your bills on time, you will be able to maintain a healthy credit score, then you are completely wrong. In a press release, Equifax stated that they are exploring the possibility of clubbing unstructured data (along with data from the social media) with structured, attributable data in order to develop analytical models that will help to assess the risks in better way and verify the person's identity. This means that any time in the near future--slowly but surely--your social networking profiles will provide a basis for your creditworthiness.
Are Banks and Creditors Already Doing This?
Profiles for Profit
In the year 2012, The Federal Trade Commission (FTC) fined Spokeo, Inc.--a data mining firm--for $800,000 in civil penalties for compiling social media databases on millions of people. It used this information to sell it to background screeners, recruiters and HR managers without ensuring the accuracy of the data, or even informing the individuals that their details were getting used. Many data mining agencies earn a lot by investigating their clients without verifying the authenticity of the information. If a similar thing happens in case of credit records, it may lead to wrong information and inaccurate credit scores.
Inaccuracy of Information
According to a study conducted by the FTC on the US credit reporting industry, it was found that 5% consumers had errors on one of their three major credit reports, which could cause them to pay more for products, such as auto loans and insurance. In an industry, where there is already so much of inaccuracy, it will be very difficult to maintain accuracy of the credit score generated by integrating information from social media, as well. A person may tweet that he is on the verge of insolvency, out of sheer fun. Taking it seriously, and making this work against the person's credit may not be correct.
Integrating Social Media in Credit Scores
Legal Issues
Resorting to involvement of non-traditional and unstructured data may create trouble with the Fair Credit Reporting Act (FCRA). Every individual has a right to see his/her credit report, whether it is being used in a negative manner or not. He can also go further to understand when and why a certain determination was made against him. This is known as notice provision. Many companies, who were using background check applications--which violated FCRA's notice provision about personal and credit-related data--have received warnings from the FTC. Apart from this, there will be several other legal issues related to privacy. Hence, applicability of social media for credit score seems a little impractical.
Integration of Structured and Unstructured Information
rich? And if you have moderate choices, does it imply that you are not well-off? In order to first integrate both these data together and then with your credit score, a smart and foolproof calculation or algorithm will be required. Otherwise, there will be too many inaccuracies and errors.
Beware of Your Social Media Updates
The following social media updates can raise red flags.
Updating your status on Facebook about your visit to the local bars.

Tweeting that you just blew your entire salary on shopping.

Liking crime-related pages on Facebook.

Tweeting that you forgot to pay your bills, yet again.

Checking-in too many restaurants on Facebook in a month's time.
Tagging yourself and your friends at a drinking party on Facebook.

Tweeting, out of sheer fun, that you are on the verge of insolvency.

Your Facebook profile information saying that your hobby is getting 'high'.

Tweeting your frustration about a speeding ticket.

Your timeline showing that you change jobs too frequently.

Updating your Facebook status that you would really like your loan officer to die!
A similar kind of plan to study data mining of social networking websites by Germany's largest credit reporting agency was met with a huge public hue and cry and was not pursued further.
Even though the credit rating bureaus are not adding your social media behavior to your credit file currently, they may resort to this practice in the near future. As you know, what happens on Facebook, doesn't remain on Facebook itself; it spreads to the world. So, for now, your Facebook posts may not hurt your credit score. Nevertheless, you must be completely cautious of what you upload on social networking websites, as it may hurt your credit score in the near future.