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Lenddo, Kreditech and Kabbage are three loan companies you should get to know. Fading away are the days where your FICO score is what determines your creditworthiness. These three companies are making smart, strategic steps when it comes to judging a potential borrower. The extent to which these companies are gathering personal information about customers, however, is struggling to create a balance between innovative and intrusive. Some borrowers might avoid these companies for their aggressively personal process, but I think it’s the perfect way to get a clear handle on a potential borrower.

We’ll start with the most interesting, new approach that Lenddo is taking: this company will actually look at your Facebook friends and see if anyone you know has borrowed from Lenddo. Any friends you make frequent contact with that have been late repaying their loans are taken into account and has a negative impact on your chances of getting a loan.

Kabbage takes the idea of a loan and turns it into a type of game. Focused mainly on small business loans, Kabbage allows a user to create an account and earn points that boost the borrowers chances of scoring a loan and even how much they can borrow. Things such as connecting your company’s Facebook and Twitter pages to Kabbage will boost your score. Those companies with a strong social media presence do better overall and thus Kabbage sees them as less risky borrowers.

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The German company Kreditech takes this idea to the next level. They look at your purchases on Amazon and eBay, content on Facebook and they even pick apart the manner in which you fill out their loan application. The longer you spend filling out the application, the better your chances. The use of all-caps (beginner tip: never fill out an application in all-caps) hurts you, and a multitude of other minute, seemingly pointless facts all add up to paint a clearer picture of a borrower than ever before.

With this innovation comes the issue of personal privacy. With a typical loan, you are giving up your privacy to an extent by allowing the lender to look into your buying history and see a broad list of credit cards and loans repaid. This new approach, however, looks into your very personal life with Facebook friends, online purchases and even individual preferences.

Some simple solutions to these privacy issues are things such as making your Facebook private or deleting it all together. In the end, though, maybe these companies are just the first to emerge in what the future of borrowing and lending will become: an extremely close, microeconomic look into a person’s financial history–not just their credit history. The entire process would become much more efficient and the current FICO system (the current process that only takes five things into consideration when measuring creditworthiness) could be phased out entirely.

So here’s to the brave, new companies that are not afraid to judge a person on what really matters. I am curious to see the future of how companies measure our creditworthiness, and if these companies are any indication, the future will be quite efficient.


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