Lenders may assess Facebook profiles to rate customers' creditworthiness

UK lenders could soon be checking their customers' Facebook profiles to assess their creditworthiness.

Telegraph.co.uk reports that this is already common practice amongst foreign lenders, some of which are due to set up shop in the UK before the end of the year.

These firms reportedly analyses potential customers' friend networks on Facebook. They use the results as an indicator of creditworthiness, assuming that people who are good with money tend to befriend each other. They also take shopping information shared on this social network into account.  

In an article for thisismoney.co.uk, financial journalist Adam Uren said he isn't surprised that lenders are going to these extreme measures to create an accurate customer profile.

He said: “It appears that lenders are increasingly expanding their horizons to get as much information as possible about their applicants, on top of information from credit reference agencies such as Experian, Equifix and Callcredit.

“Others will use payment information from eBay, Paypal and Amazon, while credit reference agencies themselves have been branching out, providing payment information from certain utilities providers.”

Despite the widespread practice, lenders are not allowed to conduct formal checks of a customer's social media contacts or directly contact them about a loan application without the customer's permission.