Want a bank loan? Get yourself more Facebook friends -- but make sure they pay their bills on time.

Banks are beginning to look at user accounts on Facebook, Twitter and other social networking sites to determine if an applicant is loan-worthy, raising privacy concerns as well as questions over whether a person's online friends, likes and dislikes can actually measure their financial stability.

Everything a person does publicly on their social-networking accounts can be found by market researchers if the user's privacy settings allow it. Researchers are now looking at a person's online conversations, the groups they join, products they look at and even who their friends are to determine loan-worthiness.

"The presumption is that if your friends are responsible credit cardholders and pay their bills on time, you could be a good credit customer," reports WTOP News in Washington, DC.

"Lenders say having a wide network of friends can expedite getting a loan, while discrepancies between your loan application and your Facebook wall information can raise red flags. Negative comments about your business also can impact your creditworthiness," WTOP reports.

At the forefront of this effort is a California-based startup called Rapleaf, which specializes in "provid[ing] social data about a company's audience," the company's Web site states.

According to a report at CreditCards.com, Rapleaf turns "conversations you have in your network into consumer profiles called social graphs. These graphs provide companies with insight into behavior patterns: what you like and dislike, want and don't want, do well and do poorly."

Pretty much everything you and your network reveal may be compiled, including status updates, "tweets," joining online clubs, linking a Web site or posting a comment on a blog or news Web site.

Joel Jewitt, a Rapleaf vice-president, told CreditCards.com that he sees a trend away from the traditional use of general demographic data -- age, gender, address -- to the use of specific data culled from the Internet.


Rapleaf's founder and CEO is Auren Hoffman, a prolific Silicon Valley entrepreneur who in 2001 co-founded Lead21, a conservative business advocacy group with links to the Republican Party, particularly to Arnold Schwarzenegger's administration in California. He writes an occasional column for the Huffington Post.

Hoffman gave a clear indication of how he views the value of social media to banks in a Tweet last fall: "If you don't know what your customers are doing online, then you don't know your customers."

One of Rapleaf's initial bankrollers was John Thiel, the founder of PayPal and an investor in Facebook. Thiel was also involved in conservatives' efforts to fight the influence of community organizing group ACORN. He reportedly donated money to John O'Keefe, the videographer who taped ACORN workers offering advice on how to operate a human smuggling and prostitution ring. (In a lawsuit filed against O'Keefe, an ACORN worker has accused the filmmaker of entrapment.)


Not everyone in the business community is jumping on the social-media bandwagon. Aside from privacy concerns, some bankers see Facebook, Twitter and the like as irrelevant to lending decisions.

"It's difficult to make a judgment about an individual's credit based on the people around them," Gregory Meyer, community relations manager for California's Meriwest Credit Union, told CreditCards.com. Social media "is a great way to keep up with what my 10-year-old nephew is up to, but it doesn't have a place in the credit process."

Consumer advocates are more vocal in their opposition.

"It's rotten," says Linda Sherry of Consumer Action. "It's really not something they should be doing. They may be gaining information from people who are naive and [don't understand] how their profiles are set. It verges on privacy violation."

Privacy advocates have long been warning of the dangers of leaving online information exposed. They suggest a number of steps to minimize exposure, including changing your privacy settings so that only people known to you can access your data, and eliminating online friendships that could reflect poorly on you.