In today’s world, no one is oblivious to the power of social media. No matter where you live or what you do, there are at least a couple of ways social media affects your life on a daily basis. Be it something as simple as random browsing on Facebook, liking and sharing pictures, expressing your opinion on various issues on Twitter, applying for your dream job on LinkedIn, or sharing small snippets of your life via photographs on Instagram. It all affects our lives in countless ways.
You might be surprised to read this, but social media also decides one of the most crucial parts of your life—your financial fate. Yes, you read it right. Given the fact that social media is so powerful, it also decides the fate of your loans and other aspects of your financial life. What you do on these social networking sites determines your creditworthiness. Quite fascinating, right? After you finish reading this article, maybe you’ll start thinking twice (or maybe even thrice) before actually hitting those like, share, and comment buttons. Every word you share on these sites impacts your life (beyond merely affecting the number of your online friends).
Additional Reading: 3 Loans That You Should Close Quickly!
Do you love trolling people on social media? Do you love to stalk people online (especially those crushes you develop on a daily basis)? Well, we know how good that feels, but there are reasons that should make you think again (apart from the risk of being called a stalker). This sneaky behaviour could potentially affect the interest rate you get on your loan. Getting a super high interest rate or a lower than industry standards one – believe it or not, your social media presence could play a role in determining this. Did that make you sit up and pay attention? Interested in hearing more? We thought as much.
You’ll be surprised to know that many online lenders and credit marketplaces judge your financial behaviour based on a factors other than your salary statements or payslips. They also judge you on the basis of things like your SMS alerts, phone location data, and your social media presence. These factors are supposed to tell them more about your creditworthiness and reliability. With the help of the latest technology like sentiment analytics, they further analyse the websites you visit frequently and the keywords you use to search on Google.
Before we begin with the analysis of how your social media channels can potentially impact your future loan applications, let’s see how this whole process works. We know you already have a lot of questions. Let’s go one question at a time.
Firstly, is everyone’s social media profile scrutinised thoroughly, or is it a particular group? Well, if you belong to the 25-35 age group, you need to be slightly more careful with what you post online. Why? Because lenders consider this age group to be slightly more risky as compared to the older ones. The reason behind that is simple. Individuals who fall in this age group have little credit history compared to the older lot. Since lenders don’t have much credit information on which to judge your payback capacity, they find it all the more important to rely on your social media profiles for more information.
It’s all about the amount of risk they associate with your loan application. Your age is one factor, but it also depends on a couple of other factors like your profession. As a freelancer, you may be earning a lot more than the normal nine-to-five job-holder, but lenders are more likely to consider these ‘nine-to-fivers’ a ‘safer’ option over you. That’s the magic of job security, friend.
How do they do it?
Well, the ways and means differ from one online marketplace to other. It also depends on the type of social networking site they are looking into. For Facebook, they analyse the quality of posts you share online, the kind of people who are in your friend list, those status updates, etc. They might also use your GPS coordinates to formulate a machine scorecard for you. They rank you on the basis of these factors, and that decides whether your loan application will see the green signal or get stuck in a heavy traffic jam.
What your LinkedIn profile says about you
One of the most crucial factors that determines whether your loan application will get accepted or rejected is your job profile. Your professional history speaks a lot about your creditworthiness. If the lender sees you as a frequent job-hopper, they might not consider you to be the best candidate for a loan. There are high chances of them looking at you as an unreliable person, who might not pay back the loan on time. So, how does a lender get to know everything (almost) about your professional life? Your LinkedIn profile, duh! If you keep updating it regularly to keep the chances of getting that dream job opportunity open, your entire professional life becomes an open book. Thanks to the power of social media, lenders have the option to screen through your professional life before actually sanctioning your loan request. Although, you consider your LinkedIn profile to be a normal resume that helps you stay active in the professional world, lenders see it as an opportunity to peep into your career stability. That’s how they judge you and your creditworthiness. If they notice any behaviour they consider to be risky, and see higher chances of a loan default; you must bid adieu to those dreams of getting your loan sanctioned. How serious you are about your professional life decides how seriously the lender takes your loan application. So, the next time you casually think of changing a job (yet again), you might want to take a minute and analyse your move first.
In case you’re applying for a business loan, having some valid recommendations on your profile can definitely help. Your LinkedIn profile is basically a reflection of your professional life and career activity. It needs to show a stable curve (if not always positive) to make your chances of getting that loan sanctioned better.
To ensure that you create the right impression, you must keep your profile updated. No matter how irrelevant you think that certificate course was, if you’ve done it, your profile must reflect it. All these small things can definitely help increase your chances of getting a loan approval. The better you look professionally, the higher are the chances of creating a good impression. As simple as that.
Your online friends and followers – they say a lot about you.
People often judge us based on the type of friends we usually hang out with. The exact same logic applies here as well. Your Facebook wall is enough to tell lenders the type of people you’re close to. And if their Credit Score is low, lenders are likely to think that you have a poor credit history as well. That’s not good, right? Now, we know that it might be hard to unfriend or block people on Facebook but you can control your privacy settings. Protect your profile and seal it such that anyone who’s not a friend can’t see the stuff you share.
There are a couple of red flags that could eventually spell loan application trouble for you:
The lender might look at the kind of followers you have on FB and your contacts on LinkedIn. Adding people on LinkedIn merely to increase the number of your connections might not be a great move after all. If the lender sees a lot of irrelevant connections, they are likely to think that you don’t have a good professional footing (which isn’t a great thing).
Those status updates. Yes, some people have this weird habit of updating absolutely everything that happens in their lives. Some smart ones also go to the extent of telling the world that they’re broke or facing some financial trouble. It might help gain sympathy, but can ultimately ruin your chances of getting a loan. Lenders might see you as a financially unstable person and no one likes to lend money to someone who can’t balance their finances. Even you wouldn’t do that, would you?
The best way to ensure that you look like a decent, financially stable person on Facebook is by checking your privacy settings or using the ‘View As’ option. It’ll give you an exact idea of how people see you when they click on your profile. And yes, please think twice before randomly sharing information on your timeline.
Does your business have a Facebook presence?
Creating a Facebook business page for startups has become pretty common these days. If you don’t want to spend too much building and maintaining your brand website, you could opt for a Facebook business page instead. It’s either free of cost will come at a minimal cost. Either way, it’s good for your business (and finances). The key, however, lies in the fact that lenders can check your business pages on Facebook and get to know the status of your company. Whether it’s profitable or drowning in losses. The popularity of your brand and its products; it’s all there. The level of customer engagement can give them a good insight into the profitability of your business.
Well, if you have a Facebook business page, you know what to do next. Check it as soon as you can and see if you’re sharing relevant stuff without giving away too much about your revenue. It should basically show your business in a positive light. If there are any unresolved customer complaints on your page, now’s a great time to resolve them or at least respond. One negative comment is enough to ruin your reputation. Remember that. Beef up that social media presence, yo!
Now that you know everything about the importance of a good social media reputation, here are some ways to ensure that you don’t create a negative social media presence:
Privacy settings
Privacy settings can help you do so much more than merely blocking creepy strangers who keep sending ‘Fraandship’ requests. Use them to your advantage. No, selecting ‘Friends only’ in the settings isn’t enough. You need to keep yourself updated with the latest privacy updates of these social networking websites. They keep changing quite frequently and unless you are well-versed with these updates, it’s hard to get your privacy game spot on. Just ensure that your personal information is not available to anyone and everyone.
Check those status updates
You absolutely DON’T need to update the world about everything happening in your life. Keep a quality check on all those status updates. Avoid posting negative posts about your job, your financial situation and other significant things. They could easily ruin your reputation with lenders and your chances of getting that loan approved.
Now you know why you need to be extra careful while posting things online. Technology enables financial institutions to get publicly shared information about you which they analyse. The idea they form about you based on this, could determine your eligibility for a financial product. Social networking sites are so much more than a mere means of entertainment during those boring office hours. So, keep a close watch on the quality of stuff you share online. It has the power to change the way people look at you. Moreover, the fate of your loan applications also depends on it.
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