MUMBAI: As reported by Times of India, an individual’s social worth may come to mean more than one’s popularity with friends and colleagues. Social worth may become a tool to assess a person’s creditworthiness, especially for those who’ve just started working, and some agencies have already started using it.
Those looking to get a loan application processed quickly or at a lower rate of interest would do well to ensure they have the right contacts on LinkedIn and a good set of friends on Facebook. Just as the income tax department tracks your holiday photos on Facebook, banks and financial companies are increasingly looking at the ‘social worth’ of people to determine if there’s a risk of defaulting on payments.
The term ‘social worth’ is changing from one’s standing in society among peers to a figure derived from one’s social media connections, personal details and bank statements – an indication of how much a person can repay.
“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,” said Ranjit Punja, cofounder of CreditMantri, which has developed a proprietary software for this purpose. “We already have a public sector bank , a private bank and a large NBFC using our alternative data sources for their loan processing.”
While CreditMantri offers credit analysis, EarlySalary is a lender. This Pune-based startup, which has a non-banking finance company licence, provides instant credit to applicants by judging them on their social media contacts.
“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 gives us a peek into the kind of person he is,” said Akshay Mehrotra, CEO of Early Salary.
Mehrotra explained that it is mandatory for someone to have a social media presence to be considered for credit on their platform. They look at ‘mirror customers’ – similar people on the applicant’s contact list who have a credit score.