July 20th, 2015 by Jason M. Kaplan, Esq.

Companies Using Facebook to Determine Your Credit Worthiness



Today, we live in a world where technology has become an essential part of life. Whether it is the gadgets we use such as our cell phones, tablets, laptops or the seemingly uninterrupted internet access on any and every device, there is little doubt that the use of technology has been embedded in us. Whether you like it or not, it is extremely difficult to live without a cell phone or access to the internet unless you live in complete isolation from the rest of the world.


With the use of internet and social media networks becoming so popular, the impact hasn’t gone unnoticed. Nowadays, every firm in every industry is using the internet and social media networks to their advantage in one way or the other. And while it may be hard to believe, even financial institutions such as banks are making use of this progress and cultivating it to their advantage.


How Companies Use Online Platforms to Determine Your Credit


So, how is it exactly that these financial institutions are using the internet to gain a greater foothold over their respective areas of expertise. Well, while initially the internet was used to promote e-banking and other similar services, its current use evolved into a much larger and perhaps a dirtier, more sadistic network that preys on unsuspecting people.


For all its glory and magnitude, Facebook, the biggest social media network in the world, has enabled billions of people around the world to connect with each other. In other words, Facebook has, in its own unique way, bridged the gap between continents. However, this has also meant that several companies have used the platform to create a greater audience for themselves. And, believe it or not, financial institutions are at the forefront of this race.



What is Your Credit Score?


Before we dive into greater detail as to how exactly Facebook is used by companies to determine your marketing score, it is important to first understand what a credit score is. In simple words, a credit score is a score or a grading scale that determines your accessibility to credit. Typically used by various lending institutions, it helps evaluate the moral hazard associated with giving out a loan. As with a typical gauging scale, the higher the score, the better your credit worthiness is and higher the chance of acquiring a loan of any sort.



How is Your Credit Score Determined?


Initially, a credit score was determined by one and one meetings. Banks and similar institutions would meet with those interested in acquiring credit and determine whether or not the concerned party was deserving of a loan. As years passed by, more complex methods of determining credit score were developed. From algorithms to complex computer systems, the system became automated. To save costs and the efforts associated with determining credit scores, outsourcing the whole process became common. In fact, even today, a lot of financial institutions outsource the process of determining credit scores to companies that specialize in it. However, with the increasing use of the internet and the popularity of marketing on social media networks such as Facebook, the paradigm has shifted quite a lot.


How do Companies Determine Your Credit Worthiness via Facebook?



When someone logs onto Facebook, it is common to see ads on the screen. From companies selling clothes to cars and so on, these ads are numerous and everywhere. The process of marketing through Facebook is rather simple and you have to pay the company to advertise your business if you want. For the unsuspecting user, the ads may well seem random and repetitive. However, behind the scene is a much more complex process.

As Facebook has all your data including your name, gender, age, city of birth, city of residence, friends, and family, it is a treasure for companies that want to advertise. Despite the promises made by Facebook about your personal data being private and confidential, the reality is that this data is sold to anyone who wants a bite at the cherry. In fact, networks such as Bing and Facebook earn billions of dollars per year by way of online financial marketing.


These companies use the data provided by networks such as Facebook to create an online profile without actually ever seeing or meeting you. For instance, if you happened to access a website selling fakes, the data would be used and you would be seen as someone who doesn’t have a lot of money.


If you happened to click on an advertisement about a low-interest loan, this would automatically mean you are on the lookout for credit and subsequently, you would be approached by companies.  Although all of this may seem a bit farfetched, this is exactly what is going on without anyone suspecting.


ZestFinance, a finance company, has a motto on its website which states that “All data is credit data”. To put things into perspective, according to Mierzwinski and Jeff Chester, “from 2005 to 2007, the height of the boom in the United States, mortgage and financial services companies were among the top spenders for online ads,”


How does it Work?


But how is that these companies are able to create different profiles based on the data available online? This process is complex and even experts are not sure how this is done. According to Aaron Rieke of Upturn, a technology policy and law consulting firm, “Measurement is an enormous challenge. You see one ad and I see another. It’s often impossible for a researcher on the outside to find out why. Maybe an ad buyer ran out its budget. Maybe we were profiled differently. Maybe the ads were geotargeted.”



How can you Protect Yourself?


Now that it is clear and evident that our personal data is being used and continuously monitored, how can we protect ourselves? The answer, even though not simple, makes sense. Instead of trying to distance ourselves from online data, we need to take a greater part in it and control what is led out and what isn’t. This way, not only will we be able to keep certain data confidential, but we will also have a final say in what goes out about us.


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