Many people are guilty of over-sharing on Facebook -- whether they realize it or not -- and the potential consequences of what people post on social media are getting even worse.
There once was a time when the only thing at stake was your reputation, but those days are long gone. Most people are well aware of the potential risks of social media these days, and it's no secret that a Facebook post can get you fired from a job or prevent you from getting a job in the future.
According to a report by the Financial Times, some of the top credit rating companies are now using people's social media accounts to assess their ability to repay debt. So if you want to be able to qualify for a loan and borrow money, this is just another reason to avoid saying certain things on Facebook.
“If you look at how many times a person says ‘wasted’ in their profile, it has some value in predicting whether they’re going to repay their debt,” Will Lansing, chief executive at credit rating company FICO, told the FT. "It's not much, but it's more than zero."
Lansing said FICO is working with credit card companies to use several different methods for deciding what size loans people can handle, and using non-traditional sources like social media allows them to collect information on people who don't have an in-depth credit history. According to the FT, both FICO and TransUnion have had to find alternative ways to assess people who don't have a traditional credit profile -- including people who haven't borrowed enough to give creditors an idea of what kind of risk they pose.
According to Lansing, FICO is "increasingly looking at data on a spectrum" to determine an individual's credit-worthiness -- with credit card repayment history being the most important factor on one end and information volunteered via social media on the other end.
And social media isn't the only alternative source factoring in to people's credit-worthiness. Credit rating companies are also using individuals' payment history on phone bills, utility bills and even movie rentals. One good sign to creditors is if someone hasn't moved a lot -- which could suggest they've had problems paying rent.
“We can now score the previously un-scoreable,” said Jim Wehmann, executive vice-president for scores at FICO.
And while this may be a great way for more people to get access to loans, it's also a wake-up call for those "previously un-scoreable" people to clean up their digital footprint -- and fast.