How does social media affect your credit score?

U.S. and international lenders are examining Facebook, Twitter and LinkedIn profiles of potential borrowers. As related by Erika Eichelberger on MotherJones.com:

“Companies like Neo and LendUp seized an opening in the market to provide low-income borrowers, who may lack bank accounts or have bad credit, an alternative to payday loans. Though credit-worthiness is typically based on factors like employment, finances, and whether you make your credit card payments on time, these companies argue that they are able to serve borrowers that traditional banks deem risky because they are able to evaluate credit risk based on more subtle social media-based indicators.

“The problem, consumer advocates say, is that because there are few regulations governing this new way of grading borrowers’ trustworthiness, applicants can be subject to unfair and discriminatory decisions by lenders.”

Federal law requires lenders to provide “hard information” behind a consumer’s credit score drop -- but determinations based on social media activity are not covered by this law. Consumer advocates argue that they should.

Reading this article, I wondered about people who deliberately don’t take part in social media. Will maintaining privacy come at the risk of a high credit score?

Eichelberger raises an important point, that social media activity might reveal less than lending companies think. “‘For you and I to call each other friends in the real world, we'd have to hang out a lot,’ says Ashkan Soltani, an independent expert on consumer privacy issues and behavioral economics. But ‘I might follow you on Facebook because you post funny cat pictures.’”