Credit Score Based on Social Network Data!

What is a Credit Score?

A credit score is a number which is calculated, utilizing some sophisticated statistical algorithms, based on your recent (e.g., last two years or so) payment history, history of managing your credits and behavior of paying your loans, credit cards, store charge cards, bills, obligations, etc. The credit score predicts the likelihood of a person’s debt repayment behavior based on the person’s recent payment history.

Figure 1: Credit Score Analyzer

How Many Credit Score Companies Are There?

There are hundreds of companies in the U.S. and around the world that have developed their own algorithms to analyze different sets of data and generate scores for different purposes. While lenders may use different scoring models to determine how you score, and each major credit bureau has its own method for calculating credit scores, the scoring models have been fairly well standardized so that a score at one bureau is roughly equivalent to the same score at another, but are not necessarily the same. Not all credit scores are created equal!

The most popular Credit Scores are: FICO Score, VantageScore, TransRisk, and Beacon score. But, I am addressing here some of the credit score companies which generate your score based on the analyzing data from social networks. These are interesting and not many people know about them. They are explained below.

Credit Score Based on Social Network Data!
There are many other companies in the U.S. and around the world that have developed their own algorithms to analyze different sets of data and generate scores for different purposes. A few interesting examples are shown below:

Lenddo Score: analyzing data from social networks (1 to 1000)
Lenddo, a Honk Kong company and other sites like it, are analyzing data from social networks and other factors to reach people who have a hard time getting loans. Lenddo focuses more on social connections to judge the customers trustworthiness.
Lenddo Score (1 to 1,000)

·         Number of followers

·         Background of peers

·         Education and employers

·         Repayment history of friends

Neo Finance Inc. Score: Based on actual income and social data (LinkedIn profile).
Neo Finance Inc., of Palo Alto, Calif., offers car loans to U.S. consumers based on their actual income and social data. Neo, which claims to save its consumers as much 50% in interest costs, targets young adults who may not have comprehensive credit histories but will likely be high earners in the future.

The company does review a user's credit report for red flags but doesn't use the FICO score in its risk calculation. Instead, the company spends more time parsing through a person's LinkedIn profile to determine how long users have held jobs, the number and quality of connections in their industry and geography and the seniority of their connections.

The company believes: When you look at that information you start to get a good sense of job stability.

Affirm Inc. Score: Based on (Gmail and Facebook)
Affirm Inc., is a San Francisco-based startup company.
In order to mitigate the risk of fraud, Affirm prompts users to connect with their Gmail or Facebook accounts, which allow the company to verify the identity of the user. From there, it scans a large set of publicly available data associated with the identity to calculate an Affirm credit score.

"These signals help us know if you are who you say you are," The Company says.

The company's algorithm draws on information from more than 100 databases and social networks, looking at an array of variables such as the user’s locations and the number of personal connections.

Resources:

To get more information about credit scores and tips and tricks on how to improve your score, please see my book at: http://www.texasfivestarrealty.com/Credit_Score_Book.asp

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