While that’s not happening yet, it may play a role in the future.
The latest news reveals that FICO is rolling out a potentially new way to determine credit scores. This new method, referred to as FICO XD, is being used as a pilot program. According to the website, this new FICO score will be calculated using “alternativedata sources to give issuers a second opportunity to assess otherwise unscorable consumers.”
What does this mean? Essentially, they are partnering with Lexis Nexus Risk Solutions and Equifax to look at more widely spanned information, such as utility bill history and public records, in order to potentially provide credit to those who may not have a credit history as of yet, for example. This is an attempt to be able to offer credit to an untapped market – those who don’t have a FICO score and/or cannot be properly assessed using traditional methods.
While Lexis Nexus is geared toward public information that is more “informational” in nature, it would not be a surprise at all if, in the future, FICO utilizes social media content as a factor in determining one’s score. Seem farfetched? Maybe. Then again, think of how social media content is currently being used. What once started out as strictly social content is now being used by brands for marketing data, HR departments to make hiring decisions, and by law enforcement and law firms.
How could social data be used as a factor in generating a FICO score? By looking at an individual’s social media history, it can uncover some potential trends that may be in favor of that individual (or not). What if an individual’s social media accounts are filled with images of parties and commentary on how the rent is late yet again, but they aren’t concerned? What if an individual posts content about being “wasted yet another Friday night?” This is an informational, relatively loose predictive analysis when it comes to financial stability or financial risk, and one that FICO may eventually turn to in calculating credit risk on individuals.
That being said, we are still a way from that happening. Data collected through social media is still in murky water, and it will take some time to sort out how it can and cannot be used in situations such as this one. Hiring managers have quickly learned how to use social media to their advantage while maintaining strict FCRA standards; it won’t be long before other institutions follow suit.