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Social media was originally about socializing. It has become so much more. Social media currently can affect your credit score and loan prospects. Lenders can now take social media into account for their lending decisions. They want to confirm the borrower's identity while determining if they are worthy of credit.
Numerous companies are interested in your activity on social media when they determine whether you are creditworthy. This can have an impact on you depending on your social media habits. You need to take your financial reputation into consideration in regards to social media. Financial impacts have already occurred pertaining to employment. The majority of employers take the candidate's activity on social media into account for their hiring decisions.
Individuals with poor credit must also be considered. They need to be concerned when it comes to improving their financial reputation when they are on social media. More and more creditors are using social media as a stepping stone for scoring metrics. Individuals with poor credit need to take this into account.
Prior to going deeper into the social media aspect of your credit score, what your credit score consists of should be understood.
Out of all the credit scores, the FICO score is the most popular. The lower end begins at 300, while the higher end has a maximum of 850. If your credit score is a minimum of 700, it is considered good. If your score is more than 760, your credit is great. The breakdown as to how credit scores are determined is important. Five factors are considered with each having a specific percentage. These are:
Credit Utilization Rate (30%): Lenders need to know the consumer is being responsible with their credit. The percentage of total credit available at any one time is taken into consideration. This figure should not exceed thirty percent. In some cases, if your credit exceeds the thirty percent utilization ratio, your credit score may decrease.
Length of Credit History (15%): Lenders need to determine how responsible the consumer is with their credit. They will check their credit history to see if their bills were paid on time. The more information included on your report, the better of a picture the lender can paint regarding your financial habits.
Payment History (35%): The most important aspect of receiving a good FICO score is ensuring all of your bills are paid on time. When your payments are consistent and timely, you will be able to maintain your credit score. Your score will also increase faster if your credit is poor.
New Credit Accounts (10%): Every time you attempt to open a new account or line of credit, your credit score will take a hit. This is classified as a hard inquiry regarding your credit report. The best way to avoid this is only opening a new account for solid financial reasons. This means not accepting a new credit card simply because you are being offered 25 percent off of any purchases you make that day.
Credit Mix (10%): This simply looks at the way you are handling payments for installment loans. This is a loan requiring a fixed payment each month such as a mortgage. Your revolving loans are also considered. This is a fluctuating loan such as a credit card.
Here are some facets of your life that creditors and lenders might try to discover from your social media activity:
Work History: Your employer's information is important to lenders. Some of them may request more details regarding your work history. This will be compared to what you put on your loan application in addition to the information on several social media sites.
Terminations and Layoffs: If you have lost your job recently, you need to clearly put this information on your application. If you leave it out, the truth can come out through social media. Be careful prior to posting you have just lost your job or are attempting to find new employment.
Bad Reviews: If you are applying for a loan as a business, your online reviews will be checked by the lending company. You may not be able to secure credit if your business has too many negative reviews.
There are tips you can use to manage your presence on social media better. A lot of this advice is similar to the way you are managing your reputation. You need to be careful who you have accepted as friends. You should avoid any questionable photos or profanity. You should also keep your attitude and all of your opinions positive. The idea is to fill up your network with influential and solid individuals. The content you share should always be positive.
The basic things you should remember are:
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Whether you are a business or an individual, one of the factors often considered by lenders regarding your creditworthiness is your presence on social media. There is a tremendous amount of data available online. The number of lenders looking towards social media to help determine creditworthiness is consistently increasing.
The world we live in is based on an economy where the importance of your reputation is increasing. Your history and credit score are even more important. If you are experiencing difficulties due to poor credit, this is a good time to consider a service for credit repair. They will help put your credit back on the right path. This will help ensure an improvement in your personal financial situation.
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