Global social media leader Facebook has a patent to use their platform to provide credit information from their users. Today direct lenders already use a plethora of different data metrics beyond a FICO score – something that has given them a leg up on banks.
The patent, filed by Chris Lunt but now owned by Facebook, outlines multiple uses but the one referenced below is of most interest;
“In a fourth embodiment of the invention, the service provider is a lender. When an individual applies for a loan, the lender examines the credit ratings of members of the individual’s social network who are connected to the individual through authorized nodes. If the average credit rating of these members is at least a minimum credit score, the lender continues to process the loan application. Otherwise, the loan application is rejected.”
Business Insider referenced the Equal Credit Opportunity Act in posting that Facebook may never use the patent since it may be discriminatory. But some direct lenders are already using social relevance to gauge how solid a borrower may be so it will be interesting to see how this one evolves.
Facebook already has a peer to peer payment service as part of its messenger application. It is not that much more of a leap in providing credit – something that is going gangbusters in China as just about every internet behemoth is getting into internet finance. Only time will tell.