A new article from TotallyMoney.com has explored credit industry developments in the use of ‘non-traditional’ credit data.
“While Google develops artificial intelligence and BMW speculate about crash-proof motorcycles, the finance sector is honing in on one of the world’s biggest markets: the social networks,” says the article. “The credit industry is changing, utilising alternative data sources in order to build loan-seeker’s financial profiles.”
From Facebook posts to location tracking, call history and browsing history, the way we use technology to interact with the world around us is now becoming part of how we’re evaluated for loans and credit cards. But how can we keep on top of it?
The standout point is just how wide-ranging the data sources are. While it might be an obvious first call to make sure loan applicants haven’t posted on Facebook about how much debt they’re in, you might not guess some of the other ways a financial profile can now be built.
- Phone contacts – not the hour-long chats with friends and family; your contact list is used by Branch and Tala Mobile to see if other finance companies are commonly called
- Purchase history – another reason not to make impulse purchases on Amazon, some companies are checking out previous acquisitions to see how responsible you are with your income
- Fraud checking – online profiles are a good way to test whether someone’s real or not. Lenddo, Moven and Kreditech have all made progress in mining them for data to protect against fraudsters
- GitHub contributions – everything can be used as data for finances, even contributions to coding libraries. So says Max Levchin, founder of Affirm (and co-founder of PayPal)
- Language processing and psycholinguistics – sounding more science fiction than finance technology, Hello Soda’s PROFILE system looks at internet footprints from a psychoanalytic standpoint.
The article covers more than the global changes in financial data sources (and it is global – the Chinese government are even planning to institute a nationalised social credit scoring system by 2020).
As well as clarifying exactly how the way you fill in forms might reduce your chances of getting a loan, it establishes how social credit scoring might develop further, looking at how far it’s come.
“The way the credit industry uses data is changing,” says, Alastair Douglas, TotallyMoney.com CEO. “We believe everyone should have the best information available when it comes to credit eligibility scoring – and that means staying on top of the latest methods and technology.”