Most of us use Facebook almost every day. It has become not only a way to connect with friends and colleagues, but also a place where we spend time. In the midst of wonderful cat videos, it can be hard to remember that Facebook is a huge, big company that aims to make a profit.
And it does so with your knowledge.
So in 2016, social capital has been taken on a whole new dimension, with the virtual world and your social life on the Internet influencing, for example, whether you get a loan or not.
Better Facebook friends, better loans
One way that Facebook and other similar free services make money is by exploiting your information. They are really worth the money. There are service providers that advise your creditworthiness based on things like your Facebook friends.
For example, having a friend with someone who has taken out a loan from the same company you are applying for a loan from and who has not repaid their loan on time will have a negative effect on getting a loan. Even worse, you can get a loan if you are actively dealing with that person.
The idea is based on the fact that people know from their circle of reliable friends and less trustworthy people. Now this information is being accessed thanks to more advanced technology.
Read the terms and conditions for getting a loan
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Often this kind of data collection is related to the so-called Credit Score, which is being carefully built in many countries, such as the United States. If your credit score is good, you can get a loan easier and cheaper than if it is bad.
If you do not have a credit rating or credit score at all, the situation can be very challenging.
In Germany, the fintech company Kreditech, as its name implies, uses technology to evaluate its lending. It has up to 8,000 different “data points” to help decide whether or not to lend to an applicant.
Kreditech uses not only Facebook information but also Amazon and eBay accounts. It also measures the customer you make during the current search process: If you spend a lot of time on the site, including careful review of articles and terms, you will get a better score. Instead, your score will be reduced if you FILL IN THE APPLICATION FULLY WITH CAPS LOCK.
Not in Finland – at least not yet
The above examples are not yet in use in Finland. Unlike many other countries, neither Finland has a credit score nor a positive credit register.
In Finland, only the so-called negative credit register is in use. This means that the lender will not be able to see the borrower’s loan amounts, principal or income in real time. They can only see if the applicant has a default payment entry.
Instead of a positive credit record, we use a service called Instant, for example. It is used by many loan providers, such as Good Lender. It analyzes your creditworthiness by tracking your online banking account transactions.
For example, Instant can check how much you have in your payroll or spend money on gambling.