Could That Facebook ‘Like’ Hurt Your Credit Score?

A plan to study data mining of social networking sites bankrolled Germany’s largest credit reporting agency provoked outrage after internal documents the project were leaked German media outlets.

Spiegel Online reported that data gathered Facebook, Twitter, LinkedIn, other social networks and Google Street view could be used “identifying and assessing the prospects and threats” with “determin[ing] the current opinions of a person.”

Sound creepy? Both politicians as well as ordinary Germans thought , too, and there a public outcry. German credit agency Schufa said project fell within the scope German privacy laws, but the backlash prompted the university it commissioned to conduct the research to bow of what was supposed to a three-year project, and Schufa followed an announcement saying they wouldn’t pursue the initiative.

Privacy experts say this is a shot the bow. “Social media data poses a potential problem in of situations,” says Paul Stephens, director of policy and advocacy at Privacy Rights Clearinghouse.

Although the German venture was scuttled shortly after inception, a combination of factors it unlikely that this quick retreat will end the broader privacy war this issue. For thing, there’s just too much money to be : Credit reporting and collections is a $20 billion business. American privacy laws are also much lax compared with European countries. Most importantly, the data is there the taking: Americans are alarmingly cavalier what they post online and how much information they expose the public.

“People are starting to get smarter it, but what you put online can essentially live forever,” says Rodney Nelsestuen, senior research director CEB Tower Group. “The challenge is that people believe there’s a connection.”

According a new Consumer Reports study, nearly 13 million Facebook users don’t know how to manage their privacy settings or don’t even realize they exist. Only 37% have altered their privacy settings to control what third party apps can “see” about them — which they have the ability to do in some cases based the activity of a user’s friend.

Right , companies collect tons of information about our online habits, probably more most of us realize. instance, Consumer Reports says if you visit a webpage that has a “like” option, Facebook knows you’ve there — even you don’t like the page. Increasingly, social network users are burdened with changes to privacy policies that expose more data default, putting the onus the individual to secure their information.

So , all this data is sliced and diced primarily with goal of selling us stuff. That can be annoying and a creepy, but it’s pretty benign compared the potential use of that type of information to determine our creditworthiness.

In the of risk management, companies have begun sifting through increasingly esoteric and hard-to-measure details people’s lives. Today, credit bureau Experian announced the debut a product it calls an Extended View Score. Intended people without bank accounts and spotty credit histories, the formula uses alternative data sources like rent payment history and public records data create a score.

“Companies are doing this already the time,” says Felix Naumann, head of information systems department at the Hasso-Plattner-Institut of the University of Potsdam, the German research would been carried out. Naumann says the three-year project was intended to study the usefulness and challenges in social network data mining. For example, do references yachts and limos mean you’re wealthy, or just a fan of reality shows the lives of the rich and famous?

How much of a risk are you if you read crime stories, vent a speeding ticket or “like” every bar in town? Figuring this is an interesting academic riddle. It’s also the grail for credit agencies, digital marketing companies and other platforms that collect and organize consumer data — and it could hurt consumers.

“If you like things pertaining to risky behaviors, that may perceived as part of your personality makeup,” says Lillie Coney, associate director of the Electronic Privacy Information Center.


Adapted and abridged from: Time World, June 14, 2012.