It’s been said that if you add up the incomes of your five closest friends and then divide that number by five, you’ll end up with your income. Some lenders are taking that saying a bit further and choosing to give loans based on your social media friends.
How it works
Hong Kong based lender Lenddo.com has begun offering loans to people that qualify and are willing to give them access to their social media accounts. The thinking is that if you have friends that are credit worthy you’re probably also credit worthy. You have to create a Lenddo.com account and add friends to it. When you pay your loan back on time it increases the score of everyone in your friendship circle. When you miss payments or refuse to pay, the scores of everyone in your Lenddo.com network are lowered.
Loans based on fake friends
The trouble is that social media is layered and nuanced. Haven’t we all “friended” people on social media that we know little about other than we both joined People That Love Black People or both follow #FunnyCats? Absolutely. Social media is where many Americans go to have fun. They create silly, fake names and interact in ways that they might not if the person was standing in front of them. Most of us have no idea if our friends are paying their bills on time or what their credit scores are. There is a lot of criticism about using social media to make decisions about real-world events, but Lenddo.com is already making loans based on your credit worthiness and that of your social media friends.
Telegraph, telephone, and tell all your friends
As if that weren’t bad enough, Lenddo.com also will let your friends know if you default on the loan. Lenddo.com reserves the right to contact your friends via social media and make them aware that you have not paid your loan back in a timely manner. The Lenddo.com site says, “Lenddo does not require any physical collateral; we leverage your reputation with your friends and family as collateral.”
There are many reasons that someone would want to take advantage of the Lenddo.com model, however there are also some drawbacks. It will be interesting to see what happens with Lenddo.com and if traditional lenders follow suit.
Will you be signing up for a Lenddo.com account any time soon?
Shay Olivarria is the most dynamic financial education speaker working today. She has written three books on personal finance, including Amazon Best Seller “Money Matters: The Get It Done in 1 Minute Workbook”. She's been quoted on Bankrate.com, FoxBusiness.com, and The Credit Union Times, among others. To schedule Shay to speak at your event or to find out more about her work, visit her at www.BiggerThanYourBlock.com.
|< Prev||Next >|