Have you ever looked at a dirty old sock and thought, “Hey, that sure looks like a delicious treat. Should I eat that?” Hopefully not! But then again, you’re not a dog. Continue reading “Are You Doing Enough to Protect Your Pet?”
As I write this, there is a lottery jackpot in excess of $200 million that has people lined up to buy tickets. Someone (or maybe a few people) will walk away with way more money than they ever dreamed of having. Sometimes, that can be great. Sometimes, not so much. Continue reading “Found Money Can Be a Blessing or a Curse”
Wherever you fall on the social media spectrum — between Twitter power user and Facebook holdout — do you know how your social media activity (or lack thereof) is affecting your creditworthiness? If not, it’s time to find out.
What is a social media-based credit score?
In the interest of finding new and improved ways of predicting creditworthiness, the social media-based credit score was born. This is an alternative credit scoring model that includes in its calculations information from your social media profiles, activity, and connections. At its best, a social media-based credit score can help borrowers who would not qualify for loans via traditional scoring models. At its worst, a credit score based on social media can hurt someone whose activity and/or connections are questionable.
Why is social media considered a valid indicator of creditworthiness?
They say the best indicator of future behavior is past behavior. Thus, the value of the traditional credit score is based on how you have handled lines of credit in the past. However, it is absolutely possible and common for people to change their ways. That’s where a social media-based credit score comes into play, basing creditworthiness on character as revealed via updates, job history, and with whom you choose to associate.
Does FICO use social media to tabulate its credit score?
Currently, FICO does not incorporate social media data into its scoring model. In turn, it does not influence your score through the three major credit reporting bureaus that use the FICO model — Equifax, TransUnion, and Experian. However, FICO has not ruled out the inclusion of social media data in the future. Earlier this year, FICO Senior Consumer-Credit Specialist Anthony Sprauve told The Wall Street Journal, “There could come a time where certain social media could be predictive and we’re looking at that, but it isn’t yet.”
Which credit scores incorporate my social media activity?
It was about three years ago when the social media-based credit score first came onto the scene. Since then, a number of small lenders have adopted this alternative scoring model, like Kabbage, Kreditech, and Lenndo.
Which social media platforms are used in a social media-based credit score?
Since there is no universal social media-based credit score, every lender that utilizes social media data does so according to its own unique formula. That said, the most common social media platforms currently accessed include Facebook, Twitter, and LinkedIn.
How are my social media profiles accessed for calculating a social media-based credit score?
Your authorization is required for lenders to access your social media profiles.
What elements of my profile or activity go into a social media-based credit score?
Again, each lender that utilizes this alternative scoring model uses its own unique formula. However, the information that tends to carry the greatest weight includes education, job history, number of connections, quality of connections, and location and seniority of connections. So while you certainly want to be mindful of what you post to your social media platforms, you should be equally concerned that your friends on Facebook, connections on LinkedIn, and the people you’re following on Twitter are doing the same.
What safeguards are in place to ensure the accuracy of a social media-based credit score?
Unlike your FICO score, a social media-based credit score requires no validation. Here’s the difference. The three major credit reporting bureaus each generate their own unique FICO-based credit score. This score is based on the listings within your credit reports, which vary from bureau to bureau depending on which agency your creditors use to report your activity. These listings on your reports are required by law to be verified, not because they are used to tabulate a credit score, but because they are used to tabulate a credit score that the bureaus share with third-parties.
This is not the case with social media-based credit scores as they are tabulated and used by the lenders alone (i.e., not passed on to a third-party). Currently, there is no regulatory body overseeing the social media-based credit scoring model. However, the practice has been noted by the Consumer Financial Protection Bureau as well as the FTC, which is planning a series of seminars on alternative scoring models this spring.
Can current or potential employers access social media-based credit scores?
Since each social media-based credit score is unique to the lender that creates it, there is no universal number for an existing or future employer to access. However, some employers do use traditional credit scores to make hiring decisions, particularly in the finance industry. As for social media, employers are increasingly keeping a watchful eye on social media sites, not only of their current employees, but also prospective ones. For this reason, be ever-mindful of what you post for public view.
Can we expect a future in which social media-based credit scores are the norm?
This is too soon to call, but it’s certainly well within the realm of possibility. So whether you agree with the social media-based credit score or not, it is best to start building an online profile that won’t come back to haunt you. After all, it’s one thing to suffer the short-term, embarrassing consequences of an ill-advised update now and then, but quite another for social media activity and/or connections to have long-term negative effects on your finances.
This entry is a guest post by Meredith Simonds, the personal finance blogger for Credit Info Center. Check them out on Facebook. You can follow her on Twitter @creditinfocentr and on Google+
Winter storm Pax not only caused havoc on roads and at many airports on the East Coast last week, it also caused havoc to my husband’s lunch break. He’s got a 4×4 monster truck so a foot of snow didn’t keep him home from work nor did the snow stop him from heading out for lunch at the nearby McDonald’s. A few workers had managed to get in and open up for the day, but the storm had knocked out power so the place was running on a generator. The sign on the front door, “cash only,” had Dave digging around in his truck for enough coins to order something off the dollar menu. Would you have had enough cash in your own wallet in this situation? Continue reading “Not Quite A Cashless Society”
In a move that could go down as one of the more surprising moves I’ve seen from a business in quite a long time, CVS has announced that by October 1st they will no longer carry tobacco products in their stores. That sounded “interesting” when I first heard about it. And then I heard how much money they made each year in cigarette/tobacco product sales…$2 billion! Continue reading “Could You Walk Away From $2 Billion?”
A lot of people have asked me how my wife and I are able to live together and travel around on a small, simple boat only 25 feet long. It’s true that it’s not a lot of space and doesn’t have many creature comforts. And when it comes to boats, there’s always something bigger and fancier with more complex systems to tempt you. Continue reading “Go Simple. Go Small. Go Now.”
One of the things that always astounds me is the behavior of people when there is money on the table. The bigger the pile, the more interesting the behavior gets at times. In my days working with clients of substantial means, sometimes their decision making would particularly puzzle me. Continue reading “What Risks Are You Willing to Take?”
One of two things hold you back from better credit — inaction or the wrong action. So it’s either time to start doing or to start doing it right. Here are 11 ways to do that: Continue reading “11 Ways To Boost Your Credit Score”
When it comes to money, kids today are presented with a world of choices that most of us parents didn’t have to worry about when we were young. You certainly didn’t have to think about the latest iPod or iPad, $100 tennis shoes, or any other purchases of that magnitude. Depending on your age, credit and debit cards may not even have been around when you were younger – if you grew up when I did, you either had money or you didn’t. Continue reading “How to Educate Your Kids on Proper Money Management”
I recently saw someone with a cell phone case that doubled as a sort of wallet. It had an opening to keep cards and cash so everything you need is in one place. At first, that seemed pretty neat. Who wouldn’t want to simplify their life?
One of the questions a lot of my friends have asked me as we got to the end of the year was about keeping their financial documents. I have friends on both ends of the spectrum. Some keep EVERYTHING and are tired of seeing boxes pile up in their attic. Others keep NOTHING and figure that with online statements, if they need it they can request it. Continue reading “Keep It or Chuck It?”
One of the reasons New Year’s resolutions do not work is that they’re too general. Lose weight, for instance, tops the list every year. But without some specific, absolutely doable action tied to the resolution, it feels out of reach and, in turn, is quickly abandoned. Continue reading “5 Focused Resolutions For Better Credit In 2014: Which One Is Right For You?”
Last week, my wife wrote a blog post to kick off the “couples and money” series. One of the hot button “budget busters” she talked about was the urge to splurge on non-essential luxury items like clothes, purses, household items, etc. (I thought her timing was perfect for the busiest shopping period of the year.) Admittedly, she isn’t the only one in our household with a taste for big ticket items as I have a long list of wants (definitely not needs) on my list for Santa. I would love to have a paddleboard, upgraded golf clubs, football season tickets for next season, or a trip to Brazil for the World Cup. Continue reading “How Your “Time Perspective” Can Impact Your Marriage”
I have talked to a lot of people about their credit scores being low and their desire to increase their score. Understanding the components of the credit score is a conversation that is important, but equally important is understanding what isn’t in your credit score. I have heard a lot of statements like “I have heard that my credit score includes X,” with X being a number of things that aren’t actually a part of the credit score. So…what things aren’t included in your credit score that many people assume are included? Continue reading “What ISN’T In Your Credit Score?”
I recently read this article about how the real question in life isn’t what you want. It’s what pain you want. We all have unlimited wants, but what are you willing to struggle for? What price are you willing to pay? Continue reading “The Question That Will Determine Your Financial Success”
This week, I will begin a series of blog posts about money and relationships. My wife, Heather (and the real brains of our family), had the idea to start off this series by exposing some lessons that we have learned along the way. Heather is self-employed full-time as an occupational therapist and specializes in working with incredible children who have developmental challenges. Despite occasionally minimizing the role she plays in managing our household finances, the reality is that Heather is also a co-financial planner in our household. Continue reading “Being Married to the “Money Doc””
I read this article today and found it very interesting. I spend a lot of time talking to people about their financial lives and I often see some of the behaviors/attitudes discussed in the article. Money freaks people out. Continue reading “Money Messages and How We Harm Ourselves”
The Earth is still so full of mysteries even though we have had scientists exploring what seems like every nook and cranny of Earth’s surface, the oceans and the atmosphere. As much as we think we know (from a global perspective, not an individual one) about how the planet works, there is still much to learn and discover. Recently, there was some volcanic activity in Antarctica and the implications for the planet are completely unknown at this time. It’s fascinating stuff! (or at least it is to me) Continue reading “Explore Your Hidden Volcano”
We may have evolved to focus on the bad things in life (our more cautious ancestors were more likely to survive and reproduce) but today is a time to give thanks for the good things that we too often take for granted. This applies to our financial life too. Here are 5 financial blessings we can be thankful for this Thanksgiving and some steps you can take to make the most of them: Continue reading “5 Financial Blessings to Be Thankful For Today”
I often analogize financial planning to dieting and exercise (as if financial planning isn’t unappealing enough already). The pain and effort comes now and the benefits come later. Both are also the subject of numerous New Year’s Eve resolutions that are cast aside by Groundhog’s Day. Continue reading “How Financial Fitness is Like Physical Fitness”
