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The Increasing Role of Social Media in Risk Assessment

With the increased speed of funds availability from alternative lenders that are able to approve a credit in minutes if not less, accurate risk assessment became a crucial part of conducting sustainable business. With traditional, usually time-consuming and cumbersome, underwriting techniques losing relevance, new sources of credible data had to be discovered. Social media networks became one of the alternative data sources to gain importance and also an indicator of creditworthiness.

Social media has been recognized by Wharton as an important data source for credit scoring back in 2014, although the practice of judging a stranger based on his/her social environment is not really new. One of the core ideas is that who you know matters. Companies like Lenddo, FriendlyScore, ModernLend use nontraditional data to provide cr ...

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