Facebook granted a US patent that could deny a mortgage application based on a users' friend list

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Warnings about your behaviour on social media are usually in regards to the fact that it could cost you your job or make you unattractive to future employers, but there are signs your online habits could affect your livelihood in other ways.

Social media giant Facebook was recently granted a patent in the United States for a system that would allow lenders to use analysis of an individual’s friend list in determining whether they should be granted a loan or not.

In the US, lenders use an individual’s credit score, a statistical analysis of a person’s credit files, in determining whether they should be approved for a loan such as a mortgage.

Included in Facebook’s patent application was a hypothetical where a lender could use the average credit score of the individuals an applicant is friends with on the platform to determine whether to proceed with a loan application.

“[The lender] examines the credit ratings of members of the individual's social network who are connected to the individual through authorised nodes,” the application read.

“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.”

According Rebecca Hona, a mortgage broker with buyers’ agency wHeregroup, Australians can relax though, as the system’s use of credit scores means it is unlikely to ever be rolled out here.

“Our system of credit reporting is quite different to what happens in America, in fact it’s almost the opposite, so I can’t see a system like that happening here,” Hona said.

While that means your friend from high school who declared bankruptcy isn’t going to scuttle your chances of getting a home loan, Hona said there are a number of common things people do that could cause a lender to deny a mortgage application.

“One thing that banks will look at is where and when you get money out, if you’re getting $200 or $300 out of an ATM at the pub or club and it’s happening every Thursday or Friday night then that can affect you as it raises the possibility of a gambling problem,” she said.

“The other thing that they’ll look for is if you’re overdrawn, even if you’re on a salary of $400,000 a year, having an account that gets overdrawn is a red flag.”

Hona said it is also common for people to be denied finance after submitting an application that is less than truthful.

“The biggest mistake that people make is not being 100% honest when applying for a mortgage, things like saying they aren’t in a relationship when they are, or if they don’t have kids when they do, or they were working when they were holidaying.

“Lenders these days will ask for a copy of a Medicare card or a statement for the bank account your pay goes into and that will automatically show if you’ve been truthful or not.”

Not including things like statements for things like your credit card that’s for emergencies only is another way people will have their applications rejected.

“As mortgage brokers we’ll go over somebody’s application and something will stick out to us and we’ll ask the applicant and they say they forgot they had that credit card or they didn’t think they had to disclose something, we probably have to go back to the applicant 70% of the time and get more information.

“If you’ve got something where there’s money going in or out regularly, that’s something lenders will pick up on and not including it in your application is going to hurt you.”
 
 

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