For a fledgling operation with little to no established business credit history, it can be discouraging to grow that business credit score. That’s why the recent announcement from Experian, regarding their new social media insight capabilities is so exciting. With the news of this innovative program for identifying credit risk, businesses have another avenue at getting access to credit that may have been closed to them before the program.
What is the Social Media Insight Program?
According to John Krickus, Senior Product Manager for Experian’s Scoring solutions, the Social Media Insight program is an “expansion” of their traditional credit analysis, and it uses data obtained from social media sites. The data isn’t scraped from publicly-available data, but rather comes directly from relationships with the social media platforms themselves. While Experian can’t say exactly what data they use, they did clarify that it’s not the same information received from consumer social media accounts. The information comes only from business accounts, and the info derived is uniquely scrutinized to build a more comprehensive overall profile for these businesses. Data, such as consumer reviews, is looked at carefully to make sure there isn’t an artificial boost.
The data is compiled into 70 separate social media attributes that Experian can use to rank its business customers and educate them on how to increase their business credit score – with the goal of ultimately giving them access to more credit services. Data fields that many businesses may not give much thought to (such as parking info, hours of operation and service descriptions) also go into the modeling, which has been useful in determining credit risk across many industries.
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How Can the Program Help New or Small Companies?
As stated in the interview, Krickus believes that those startups that don’t have a deep credit history could overcome some financing hurdles by relying on social media footprint data. While an established credit profile will always be favorable and take time to build, this social media credit profile adds depth to an otherwise new and “shallow” business. The information shared on social can fill in the gaps, so to speak, and create a deeper overall profile that can help lenders determine risk. He claims that they are seeing less risk among the businesses with richer social media data vs. those who don’t.
Established companies, who usually have much more data to interpret, can also see advantages: “…even for established businesses we’ve seen double digit gains in the measure of performance,” says Krickus. New or established companies can get help getting matched with financing with Nav, and building a business credit profile is always a worthwhile endeavor.
A Pleasant Upside to Big Data?
While the new development seems to offer exciting opportunities for those startups who may have previously been shut out of funding, the partnership Experian has with social media companies will likely be scrutinized – as it should. This new level of data gathering is likely a reasonable next step in modeling for risk management in lending. People who are a bit reluctant to involve Google, Facebook, and the big data giants in even more of their lives should know that it’s happening anyway. Getting a piece of the lending pie just seems like a nice way to get something back for having the data giants in every facet of your life – and business.
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