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It is estimated that nearly a third of all small businesses in The States don’t have sufficient business credit history necessary for money lenders to evaluate whether they are creditworthy. As such lenders have been looking at alternative ways, using alternative data to determine whether they lend to a business which has no established credit history.


Credit companies have researched the relationships between social media profiles and creditworthiness and seem satisfied that data from social media can help determine the risk of lending, where businesses don’t yet have that all important credit history. They have even come up with software to capture certain phrases and keywords which could affect us all, as consumers (so you may want to think twice before posting those drunken party pics!).


Last year Facebook restricted the amount of information a third party could pull from a user’s profile, although it is thought they considered providing a predicted average credit score of potential borrower’s friends. However when the US Federal Trade Commission hinted that providing information would require the likes of Facebook to be industry regulated, it all seemed to come to a standstill.


But this surely gives us a few questions to ponder over…


To what degree are our social network activities affecting our credit scores here in the UK?


Is this good reason for every business to have a healthy social presence?


Does this mean we need to curb our content?

 

Consider a business with little credit history and no social media activity. How can credit agencies determine the level of risk? Then consider a similar business which has a healthy presence, good engagement with other businesses and customers, backed up with excellent reviews and can provide analytics of its social media networks (Twitter, Facebook and Google Analytics are so easily accessible, with Instagram rumoured to be rolling out their analytics soon).


Whether this is an effective, or even ethical way to determine the level of risk, at the very worst portraying a professional first impression to, not just lenders, but potential clients, is probably reason enough for us all to build and maintain a healthy social media presence.

About the author

Tony Walton is the head honcho here at Excelsier, and he knows social media both inside and out. Not only that, but he's a fine fellow who loves nothing more than to help other businesses grow and flourish via their use of social media. He also brews a mean cuppa, so if you fancy learning more about how social media can be used effectively to boost your business AND enjoy a decent beverage at the same time, then you couldn't be in better hands.

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