Such is the dystopian fantasy peddled in a recent article by Betabeat.
Okay, so it's not entirely a fantasy. We have Lenddo, a Hong Kong-based microlender which describes itself as the world's first credit scoring service that uses your online social network to assess credit. Lenddo got a boost from something called the FinTech Innovation Lab , a program for financial technology startups that counts not just Bank of America, but Citigroup (C), American Express (AXP), Goldman Sachs (GS), Capital One (COF), UBS (UBS) and seven other giant U.S. and European financial institutions.
Lenddo may only be reportedly lending Filipinos $5 today, but soon, Bank of America will buy it as just the latest part of its strategy and before long your association with your pot-smoking 30 year-old cousin who has never worked a day in his life will prevent you from getting a home loan!The concept behind Lenddo and other half-baked business schemes mentioned in the article is that "birds of a feather flock together," as the CEO of credit scoring startup Credit Karma tells Betabeat writer Adrianne Jeffries. In other words, banks can look at who your friends are and what your tweet on Twitter to decide how creditworthy you are likely to be. This sounds horrifying--some person in a remote office in another state or even another country who you've never even met making decisions about whether or not you can pay your bills based upon some flip Facebook comment you once made. Except how much more horrifying is that than the arbitrary decisions banks are already making--based upon, say, the time Banana Republic sent your $30 bill to the wrong address for years and suddenly a psycho robocalling bill collector started threatening you, telling you you now owed $200 and you repeatedly hung up the phone only to discover years later when you tried to buy an apartment that your credit score was in the toilet.