SALT LAKE CITY (ABC4) – Utah’s inflated real estate market may have Utahns scrambling to appeal to lenders for loans. Here’s what you may not know about how lenders evaluate potential clients.
ABC4 spoke with Dr. Ann Kaplan—one of the stars of “The Real Housewives of Toronto— on what Utahns can do to make a better impression on potential lenders. Dr. Kaplan is more than a television star; she has a doctoral degree in finance with an emphasis on the roles of algorithms and similar Artificial Intelligence in determining consumer credit scores.
Dr. Kaplan’s most recent expertise is on several new criteria that lenders are looking at to determine the eligibility of those looking for home or other loans. In short, Dr. Kaplan says there are many different things that lenders may look at other than the usual FICO credit score that is determined by credit use and timely payment.
Utah readers may be surprised to learn that Dr. Kaplan has evidence to show that lenders are taking potential borrower’s social media activity into account when determining loan eligibility. Facebook, Instagram, LinkedIn, and other social media accounts may get attention from lenders. Specifically, lenders will look for information about frequent job change, debt, and personal statements about one’s finance.
Lenders may also look for frequent address changes on social media accounts, indicating that the user is perhaps defaulting on rent or mortgage payments. Dr. Kaplan suggests that young people who may be moving frequently keep a permanent mailing or billing address with their parents.
Shockingly, Dr. Kaplan says that lenders may even look at one’s friends on their social media accounts, what she calls a “credit score of friends.” She advises that social media users be mindful of how their online associates might influence said “credit score of friends.” In an example, Dr. Kaplan says she would avoid social media friends that frequently post about financial difficulties or address changes.
Dr. Kaplan indicates that a system of “social credit” has been in place in China since 2014, but that a similar more subtle system has existed almost as long in the US. “Finance markets are the biggest in the world,” she says, stating that lenders will use any data they can to get an edge over their competition and to guarantee a better return on their loans. Because these loaner tactics are so new, there is not a lot of data on how far they reach or on their overall impact.
“We really have no financial privacy.” Dr. Kaplan syas that rather than get frustrated about the various privacy intrusions by lenders, Utahns and others in the US should try and take advantage of the new ways that lenders are determining credit eligibility.
Dr. Kaplan says that in order to do so, Utahns should keep doing the usual things to earn a good credit score, such as avoiding any trigger of a credit drop like a missed payment. She also encourages people to avoid using cash, and pay your credit card off in one payment a couple of days before a balance is due. Dr. Kaplan expains that by doing so, you are essentially optimizing your credit identity for a positive review by the algorithms that determine credit eligibility.
Utahns can also game the way lenders look at social media by making their accounts appear professional, financially stable, and economic. Dr. Kaplan even mentions sticking with one bank account over a long period of time to have an extensive record of timely payments, rent, and other fees. Lenders can even determine automatically if a bank account is associated with a payday loan.