Online presence could determine credit worthiness

Social media usage can play a big part when credit scores are calculated, according to data compiled by China’s largest internet service portal, Tencent.

The data was then processed by peer-to-peer lender China Rapid Finance using an algorithm which looked at how often and for how long users were using internet services such as WeChat and Candy Crush Saga.

Founder and CEO of China Rapid Finance believes that how consumers use the internet is a good way of checking their creditworthiness as 80% of the Chinese do not have a credit history or access to credit, according to the Financial Times. “These are 500 million Chinese consumers who are currently financially active, but are not covered by the current financial system. That is the gap we are trying to fill,” Wang says.

The FT reports that so far, three million peer-to-peer loans have been given out under these conditions in the past six months when Tencent joined forces with China Rapid Finance. Wang explains the logic behind giving social media usage this much importance as it implies how much a person values their online presence. “The more someone uses social networking services, the more it shows that people are concerned for their reputation, concerned for their integrity,” Wang says.

Wang continues to say that when consumers purchase online computer games, it is a good way of finding out how likely they are to pay back loans. “These criteria are different from traditional credit bureaus, but using the data we can still tell if a person will have a tendency to pay back a loan.”

The Chinese peer-to-peer lending industry is booming with more than 1,500 companies operating. A subsidiary of Ping An Insurance, Lufax, known to be the largest peer-to-peer company, was valued at $10 billion in a funding round recently.


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Deutsche Bank