It turns out that having the right friends on Facebook (FB) could actually have real life financial consequences for some people.
A new group of financial lending companies are scrutinizing potential borrowers’ accounts on the social media platform to see if the sort of friends they have are a sign of their creditworthiness. These lending startups generally target people without a credit history, a market bypassed by traditional financial institutions, CNN notes.
For instance, Lenddo, which operates in the Philippines and has about 250,000 members, checks Facebook friend lists to see if a potential borrower is associated with someone who is a delinquent Lenddo member. If such an association is found, it can scuttle any financing arrangement.
For now, these new lenders are concentrating on emerging markets where credit is difficult for many middle class residents and new business owners to obtain. Traditional lenders in developed markets are not expected to start examining a borrower’s Facebook friends to determine credit scores.
Not yet a least.