SALT LAKE CITY (ABC4) — Utah’s inflated real estate market may have Utahans scrambling to tap into lenders for loans. Here’s what you might not know about how lenders assess potential clients.
ABC4 spoke with “The Real Housewives of Toronto” star Dr. Ann Kaplan about what Utahans can do to make a better impression on potential lenders. Dr. Kaplan is more than a television star; she holds a doctorate in finance with a focus on the role of algorithms and similar artificial intelligence in determining consumer credit scores.
Dr. Kaplan’s most recent expertise focuses on several new criteria that lenders are looking at to determine eligibility for those seeking home and other loans. In short, Dr. Kaplan says there are many different things lenders can look at other than the usual FICO credit score which is determined by credit usage and timely payment.
Utah readers might be surprised to learn that Dr. Kaplan has evidence that lenders consider a potential borrower’s social media activity when determining loan eligibility. Facebook, Instagram, LinkedIn and other social media accounts may attract the attention of lenders. Specifically, lenders will seek information about frequent job changes, debts, and personal statements about a person’s finances.
Lenders can also look for frequent address changes on social media accounts, indicating that the user may be in default on rent or mortgage payments. Dr. Kaplan suggests that young people who move frequently keep a permanent mailing or billing address with their parents.
Amazingly, Dr. Kaplan says lenders can even look up her friends on their social media accounts, what she calls a “friends credit score.” She advises social media users to keep in mind how their online associates might influence so-called “friends credit rating”. In one example, Dr. Kaplan says she would avoid social media friends who frequently post about financial difficulties or address changes.
Dr Kaplan says a “social credit” system has been in place in China since 2014, but a similar, more subtle system has existed for almost as long in the United States. “The financial markets are the biggest in the world,” she says, saying lenders will use all the data they can to gain an edge over their competitors and secure a better return on their loans. Because these lending tactics are so new, there isn’t much data on their reach or overall impact.
“We really don’t have any financial privacy.” Dr. Kaplan says that rather than be frustrated by the various privacy intrusions by lenders, Utahns and others in the United States should try to take advantage of new ways lenders determine credit eligibility. .
Dr. Kaplan says that to do this, Utahns should continue to do the usual things to get good credit, like avoiding any triggers for bad credit like a missed payment. She also encourages people to avoid using cash and pay your credit card in one payment a few days before the balance is due. Dr. Kaplan explains that by doing this, you are essentially optimizing your credit identity for positive review by the algorithms that determine credit eligibility.
Utahns can also game the way lenders view social media by making their accounts look professional, financially stable and economical. Dr. Kaplan even mentions sticking to one bank account over a long period of time to have a detailed record of timely payments, rent, and other expenses. Lenders can even automatically determine if a bank account is associated with a payday loan.