Those who wish to get their loan applications processed quickly or at a lower rate of interest would do well to ensure their high 'social worth' and 'creditworthiness' on Facebook and LinkedIn.
According to an Economic Times report, a person's popularity on social media may become more important than one's popularity among friends and colleagues. Having the right contacts on LinkedIn and the right set of friends on Facebook may become instrumental in assessing an individual's creditworthiness, especially for people who have just begun working.
Some agencies have already begun doing so, the report said. Banks and other financial institutions are taking into consideration the 'social worth' of individuals to check if there's a risk of defaulting on payments.
The meaning of 'social worth' is gradually changing from an individual's position among peers in the society to a figure derived from one's social media connections, personal details and bank statements, which are an indication of how much a person can repay, ET reported.
Ranjit Punja, co-founder of CreditMantri, which has developed proprietary software for the purpose, was quoted by the daily as saying: "This is becoming the norm mainly for first-time borrowers, for whom there is hardly any credit data available. To be able to lend to this section, banks are using alternative sources of data to decide on creditworthiness... We already have a public sector bank, a private bank and a large NBFC using our alternative data sources for their loan processing."
A startup called EarlySalary, with a non-banking finance licence, based in Pune gives instant credit to people based on their social media connections. It has processed applications of over 1,000 borrowers for loans worth Rs 1.4 crore across Pune, Bengaluru and Chennai, the report stated.
Adding that it is compulsory for individuals to have social media presence for getting credit on their platform, Akshay Mehrotra, the CEO of EarlySalary, was quoted by ET as saying: "We are mostly lending to the youth who have just joined the workforce and are credit hungry. To be able to underwrite such advances, we are using the individual's Facebook, Google Plus and LinkedIn data, which give us a peek into the kind of person he is."