… a new generation of companies is beginning to deploy algorithms that sieve through these data to separate trustworthy borrowers from those likely to default and to price their loans accordingly. Some—like the Hong Kong-based Lenddo
, which currently operates in the Philippines and Colombia—do so by scrutinizing the applicants’ connections on Facebook and Twitter. The key to getting a successful loan from Lenddo is having a handful of highly trusted individuals in your social networks. If they vouch for you and you get the loan, your select friends will also be notified of your successes in repaying the loan. (In the past, Lenddo even threatened to notify them
—exerting maximum peer pressure—if you had problems repaying the loan.)
Similarly, the U.S.-based LendUp
, which hands out short-term loans with high interest rates while allowing its most trusted established clients to move to more attractive longer-term packages, looks at social media activity to ensure that factual data provided on the online application matches what can be inferred from Facebook and Twitter.