Let us be frank. Credit bureaus and various kinds of background checks have come to forefront because lenders doubt borrower’s ability to repay their debts. For years together, banks and other credit institutions have come to rely upon individual credit ratings to determine one’s loan eligibility. However, the rate of delinquencies and defaults has still increased. Therefore, lending institutions are now indulging in alternate techniques in determining a person’s intent to repay and possibility of default. Probing your CIBIL rating is not enough anymore.
Your personal life is quite public today, thanks to social media. Your presence on Facebook, Twitter, Instagram, LinkedIn and a gamut of other such popular online platforms is the norm today. You are considered “virtually dead” if you are not active online. It wouldn’t be wrong to say that your online profile is a link to your personal life and anyone who can view your profile can easily peek into your ‘likes’, preferences, friends etc.
Through your pictures and status updates they can see where you have been, what you have done, who you met, what you did etc. Absurd, as it may sound, but it is true that potential lenders are fishing for clues on your internet profiles that would tell them something about how you would turn out as a borrower. If you reek of risk, then be prepared to face rejection.
Personal loans are a common choice of public in general and they are one of the riskiest loans as they are unsecured. Lenders turn a bit finicky when it comes to personal loans. They wish to extend a personal loan only to borrowers who have exemplary scores and a radiant credit past. Since the likelihood of default is high in personal loans, lending institutions reject the applications even at the slightest hint of risk.
To assess every application fairly and to avoid every possibility of default, few institutions are trying to incorporate a protocol to make it mandatory to check one’s online profile. They look for the extent of your presence online that is the different platforms you are present on, the length of your social presence that is since when have you been socially active online, the kind of interactions you have, your friends and a host of other similar factors are considered to arrive at your credibility.
Ever heard of a “social score”? It is the score that lenders give to you for your online behaviour. Believe it or not, they read your status updates, they check your likes, they look for your ideologies, your comments etc. All this helps them understand whether you are an online bully, or have you done or written anything unlawful, are the chances of you being booked high etc.
Yes, they can even view the IP addresses you have viewed in the past. Are there any addictions, online sites you are hooked to or whether you have any anti-social linkages? For example, a person with a bag of ammunition and calling it one of their “prized possessions” may not be an ideal candidate to receive funding from the bank.
For instance, lenders check your friends’ list. It is unnatural to expect every person to know if a friend or acquaintance is falling behind on their payments. It may not even be important to most people. While these things alone are not enough to grant or deny any loan to you but these coupled with a borderline or poor credit score will certainly sound the alarm bells for the lender.
They are important for lenders to determine the personal loan interest rates that should be levied based on the “social risk factors” as well.
What Can You Do?
Everything that would impact your eligibility doesn’t fall under the purview of CIBIL. It is restricted to recording only credit related activities. However, lenders are increasingly showing interest in your online social profiles as well to measure the actual threat you pose as a borrower, by studying your online personality traits.
You must have heard that employers check online profiles before hiring. Now lenders too are actively exploring them. So what is it that you can do? In the interest of your own bright credit future you must maintain a polished credit record and thereby a stellar score. If your credit score and credit history are flawless then lenders may care less about your personal and social life.
Having a good online social outlook will not only help you earn more followers but also avoid a possible rejection of personal loan.
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