You might be totally unaware but the social messages you post on Facebook, Twitter

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and other online social media networking websites might be passing a close scrutiny by the creditors at this moment in time. The aim of these creditors is to find out your creditworthiness and for finding this out some are keen to look closely into the information you and your friends reveal in the virtual troposphere. Before you initiate next steps, though, let us understand how all this really works.

According to Nielsen Online, 67 per cent of the global online population uses Facebook, Twitter, Linkedin or a similar social media network to stay in touch with friends, grow their business or just have fun. If you are visible to others on the networking websites then you are also visible to those wanting to sell their services and that includes banks and other credit issuers.

“It’s a marketing trend as opposed to a credit score trend,” says Joel Jewitt in an interview to CNBC, vice-president of business development of Rapleaf, a San Francisco, California, company specialising in social media monitoring. According to Jewitt, in the past, marketing pr­oducts to people was primarily done via demographics — age, sex, location, education, etc. That data isn’t always so ac­curate, though. Thus, user de­mographics have been shaped into multi-dimensional behavio­ural targeting that allows creditors to draw conclusions about wh­at type of credit customer you may be. The idea as per Je­witt is, “like follows like” — so if your online friends express cur­iosity about something, so too may you, whether you say so or not.

Jesse Torres, president and CEO of Pan American Bank in Los Angeles, agrees that Rapleaf and other similar online information agencies fill a need within the banking community. “They’re able to scour the social media universe. They are constantly listening and reporting back.” “By knowing what people are saying, financial institutions can make the most of their marketing dollars and this provides consumers with what they want,” says Torres in an interview to CNBC.

Considering the economic crisis owing to subprime lending, another reason credit issuers are looking to this data is to reduce lending risk. Social graphs created out of your day-to-day communications with people in your online network allow credit issuers to know if you’re connected to a community of great credit customers. Creditors can see if people in your network have accounts with them, and are free to look at how they are handling those accounts. The presumption is that if those in your network are responsible cardholders, there is a better chance you will be, too. So, if a bank is on the fence about whether to extend you credit, you may become eligible if those in your network are good credit customers. Ken Cl­ark, author of The Complete Id­iot’s Guide to Boosting Your Financial IQ says, “Social graphs can preemptively cut the amount of charge-offs by not giving high-risk people a card. It may translate into hundreds of millions of dollars industry wide.”

But not everyone in the industry is jumping on the ba­ndwagon. “It’s difficult to make a judgment about an individual’s credit based on the people around them,” says Gregory Meyer, community relations manager for Meriwest Credit Union in San Jose, California. All of this gives way to privacy concerns and a lot of worry about how what you make public can be used and who will see it. Still, there are concerns about how companies using social media information may be justified to do so. What you divulge can have unintended impact. “We’ve seen this with applicants not getting jobs and employees getting fired for their Facebook and Twitter-based escapades,” says Clark, “so we shouldn’t imagine this to be any different.”

Jules Polonetsky, co-chair and director of Future of Privacy Forum, supports behavioural marketing but considers using data for creditworthiness is an extreme use of if it. “It’s shocking to users. It goes beyond the kind of data use that people feel comfortable with.” More, he says, this application of behavioral marketing risks driving legislative action. “The general use of data is the subject of hot debate in Washington. The Fe­deral Trade Commission (FTA) is examining its view of behavioural data, trying to get to the appropriate rules. The entire future of behavioural marketing use is up in the air and this could upset the apple cart.”

So, what should a user of such social networking websites do? “I think it is crucial that everyone visit the privacy notices for the sites they use, read them, and change their settings to limit who can see their information,” says Clark. Also, one could employ private filtering on your browser to make your activities out of sight of public web profiling systems. Further, it is prudent to not to accept invitations to your social networking site from people until you check their profiles out first. Again, be acutely aware of what you write. Don’t make public anything you don’t want public. Lastly, try taking an ann­ual record of all your social networking sites and delete people and information that can potentially damage you in the eyes of a creditor or employer.

The writer is doctoral candidate at Carnegie Mellon University, Pittsburgh, PA and also Knowledge Editor of Financial Chronicle