F Stands For Facebook: Presenting The New FICO Credit Score

Tyler Durden's picture

In April, we brought you the "FAKE-O" score or, as we delicately described it, "banks' brilliant plan to lend to deadbeats."

The problem with FICO scores - or any other measure of creditworthiness where the model inputs are linked to payment history - is that they don’t end up being very high for people who aren’t good about making payments on time and that’s bad news when you’re trying to build a successful “originate to sell” model. 

If you’re a subprime auto lender for instance, and you want to make as many loans as you can so that you can sell them to Wall Street where they will be put through the securitization doomsday machine, you don’t really care about the creditworthiness of the borrower, but you have to base your decisions on something because if any annoying regulators ever come sniffing around your books trying to figure out why the entire market just disintegrated into a smoldering pile of subprime ashes you can point to a number and say "see, by this metric things should have been ok."

So what do you do? Well, one thing you can do is come up with an alternative way to measure creditworthiness and preferably one which is virtually guaranteed to come back with a happy result, which is exactly what Fair Isaac decided to do. Here’s what WSJ said about the new "unnamed" score at the time:

The new score, which isn’t yet named, will be calculated based on consumers’ payment history with their cable, cellphone, electric and gas bills, as well as how often they change addresses and other factors, according to Fair Isaac, also known as FICO. Traditional FICO scores that lenders use in the approval or rejection process are calculated based on the information in the credit reports from the three major credit-reporting firms, Equifax Inc., Experian PLC and TransUnion.


The new score will instead pull data from a separate database of telecommunications and utilities providers maintained by Equifax.

Got that? The "new score" will determine how creditworthy someone is by asking the utility company if the lights are still on and asking the phone company if the phone is still connected. 

Now obviously, some of the last things people will stop paying as they descend into abject poverty are the electric bill and the phone bill, so if you wanted to engineer “evidence” of creditworthiness, this is a good place to start as anyone who managed to keep electricity flowing to their home last month suddenly deserves a loan for a car. 

But because that wasn’t (nearly) absurd enough, Facebook has a better idea. Mark Zuckerberg will determine your creditworthiness based on your friend network. 

No, really. Here’s The Consumerist:

Earlier this year Facebook announced it would dip its toes into the pool of mobile payments by launching a system that allowed users to send money to friends via the Messenger app. Now it appears the company may take things a bit farther after receiving approval for a patent this week that would allow creditors to determine whether or not someone is worthy of a loan based on their circle of friends on the social networking site.


The patent — which was actually applied for by Facebook back in August 2012 — is for a system of authorization and authentication based on an individual’s social network. It could have several uses, including filtering out spam email and offensive content, and improving searches on the site.


However, it’s the use related to approving or denying a loan request based on the friends you keep that is a bit worrisome.


“When an individual applies for a loan, the lender examines the credit ratings of members of the individual’s social network who are connected to the individual through authorized nodes (connections),” the patent states. “If the average credit rating of these members is at least a minimum credit score, the lender continues to process the loan application. Otherwise, the loan application is rejected.”


According to the patent, the lender would be able to access a potential borrower’s social circle by submitting a request for information from Facebook’s databases. They would then receive a series of lists – grey, black and white – that would be used to determine the average credit score for the would-be borrower’s friends.


And while Bankrate.com's Greg McBride assures us that this is "nothing to lose sleep over for people with decent credit history," it's not the borrowers we're concerned about. The question is this: what happens when billions in loans that were made based on Facebook's proprietary friend check end up packaged and sold to investors? Or maybe more to the point: how utterly insane will this one day look when everyone suddenly realizes that a wave of defaults all have one thing in common... that the underlying loans were made based on borrowers' social networks?

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Bloppy's picture

Go ahead and be a deadbeat, make friends with rich people on FB, get a loan to buy a Ferrari! Sounds normal to me.


Morning Joe mocks Fox: ‘Donald Trump, do you beat your wife when you’re drunk?’


NoDebt's picture

What is your credit score?  Can we be friends on Facebook?

AlaricBalth's picture

Only if you Poke him first!

jaap's picture

I just started a new company under the name:



OrangeJews's picture
OrangeJews (not verified) jaap Aug 7, 2015 12:57 PM

Just added Carlos Slim.  I'm finally going to be able to buy a Greek island!

Harlequin001's picture

I think ity's a fuckin' great idea.

 No seriously, load it up. Why not. The difference between being fucked, totally fucked and totally and utterly fucked is that you've got friends you can rely on.

So get them to pay in a default.


I'd like to buy a central bank please, it doesn't matter what it costs, I can get it, and I've got a shit load of friends who just 'like' me to death...

froze25's picture

Yeah that sums it up, we are going to hell in a hand basket.

knukles's picture

OMG ... It truly is the end.
Next stop will be since the credit scoring process is faulty, the credit scorers will be put out of business by the goobermint then the goobermint will take over the business and improve upon it by just granting everybody a 750+++, AAA, A-1+, P-1, etc., and then releasing them from their debts if they live in certain fucked up zip codes, are illegal immigrants, Muslim, black, quadriplegic running backs (I told one of my SF 49ers Progressive fans that they should get a quadriplegic running back since he's into diversity and equality, but "Oh fucking no!") Fans of Cait, registered Democrats, whatever.

Four chan's picture

how sick is everyone of pc forced multiculturalism?

saints51's picture

Everybody on ZH can friend each other, get a loan, BTFD, profit, buy gold/silver/land/seeds/ammo/guns, and repeat process

saints51's picture

Good deal. You will be my first friend on facebook. Our whole Facebook motto can be built around buying the fucking dip. Have stickers made saying "I Love the Fed" and do that share shit for some middle finger +1. Every time market goes down we can ask Kevin or Janet on facebook is it time to BTFD. If they do not respond we will just say they hate jews. It will work.

The9thDoctor's picture

I tell average joes all of the time, that the easiest way to increase your FICO score is to simply request a credit limit increase once every seven months after having a 100% payment history. They look at me like I have two heads and then they argue with me, telling me it isn't true.  Then they come up with all of these logical reasons why that won't work.

Hey, if you think keeping your Capital One card at a $300 limit and putting a $297 balance on it every month works, then keep doing it.  That's why you're still in the low 600s and won't ever escape.

We have so many subprime borrowers in this country, because we have so many economically illiterate people in this country.  The two go hand in hand.  Even when you explain how the flawed system works, the average joe idiot argues with you, instead of just accepting the system as flawed and gaming it with that knowlege.  They have this bias on how they think the way things should work, instead of going off of the way things do work.

In the schools today, the only exposure to finance is a half credit economics course for Seniors in high school.  The textbook mentions the existance of the FICO system, but doesn't explain how it actually works.



AGuy's picture

"ell average joes all of the time, that the easiest way to increase your FICO score is to simply request a credit limit increase once every seven months after having a 100% payment history."

They are better off with a lousy credit score. Borrow lots of money is a fast and easy way to go broke or end up with nothing but problems.

"We have so many subprime borrowers in this country, because we have so many economically illiterate people in this country. "

You made my point!



JLee2027's picture

The #1 reason for default is low credit scores preventing you from getting another loan. Fuck FICO.

CrazyCooter's picture

Just another indicator that debtor prison ... er, re-education camps, are coming to those who can't pay their bills. Gotta keep those pensions solvent!



El Oregonian's picture

A good con-artist will come up with the new "FleeceBook"!

RaceToTheBottom's picture

Why not use your network of FB Friends as indications of "Credit Worthiness"?


NSA is already using your same network as indication of "Future Crimes"

Oldwood's picture

You can bet that they are developing algos to sift their infinite data collection creating our profile based on every dime we spend, every opinion we express, every place we have ever been since childhood, combined with our health history, what we eat, and our genome file. Their composite analysis will be absolute and undeniable. Well beyond pre-crime, they will claim ownership of our very essence...the meaning and expression of us. We will have no line of argument or defense as their analysis will be so complete, so all encompassing that we will have no grounds, no resource of credibility to refute it. Absolute tyranny of their interpretation of FACT using the claim of SCIENCE to declare the debate is over, and will have the appropriate graph to prove it.

sonoftx's picture

Never thought about it in quite so much detail Mr Oldwood. But you are right, how would you fight "science." Kind a scary.

conscious being's picture

Easy. Opt out. Play a different game.

RevIdahoSpud3's picture

Of the "three" precious metals you omitted the most important of the three, Gold. Silver and Lead. As the saying goes, and it's my saying by the way, "He who owns the lead, owns the gold!"

Four chan's picture

the results of this credit report will be racist, its inevitable.

daveO's picture

Never fear! BHO will come up Cabinet-level agency called the Flash Mob Assistance Agency(the Flash M' Ass Agency).

mkkby's picture

That's why I'm going to patent my own credit score.  The F (for fat) score.   The more a person weighs, the higher their credit score.  People who can pay for more food must be richer than skinny people. 

This is the only score that includes people in the black market economy.  Even if you don't have a bank account, you still could be cash rich and my fat score will capture that.  All those walmart people are the wealthiest around.  Laugh at them all you want.

RevIdahoSpud3's picture

Well those Wal Mart folks are definately rich! In fact, using the Federal SNAP (food stamps) program they can buy the most exotic foods (junk) that only those with money running out of their asses could afford. Not only that they are doing it using "other people's money" which not only attests to their wealth but to their advanced intelligence which is theory taught only at Ivy League schools.

Chuck Walla's picture

I added Chapo Guzman! I'm good to go for a kilo!


Abitdodgie's picture

What sort of narcasistic stupid people go on Facebook, never mind just read the question.

ebworthen's picture

The kind who think it is a good thing to have a high debt donkey score ("credit score").

They also think the FED is the FBI, and the NSA is protecting us from "terrorists".

They tend to populate Starbucks, Chipotle, the Apple Store, and large cities.

greenskeeper carl's picture

I have a high credit score but I don't really borrow much. Just a perfect payment history. Don't like using a debit card when shopping online due to the much much better fraud protection with a credit card. And I buy a lot of shit online. Having a good credit score is possible without having a bunch of debt, and isn't a bad thing.

Nexus789's picture

Lots apparently. All posting meaningless drivel to each other - futile and frivolous. Once the dumb marketers figure out that Fumblebook advertising does not work and they are wasting billions it will crash.

Agstacker's picture

They'll probably merge the like and 'donate' buttons.

TerminalDebt's picture

I'll be your friend for $1 I got good credit score

metastar's picture

I swear, if your credit score lowers my credit score I'll de-friend you so quick you'll be praying that your Obama phone can pair your credit.

debtor of last resort's picture

Can we be friends, Mr Zuckerberg? Please?

I'll suck out 300k and buy phyz. Thumbs up asshole.

Lost My Shorts's picture

You knew that Farcebook had to eventually over-reach and kill their golden egg-laying goose, and maybe this is it.

When people realize they need to think hard about who their friends are to safeguard their access to credit; when people start getting rejected as friends because someone else thinks they might be a drag on credit scores; that migh be when people realize how malignant this company has become and say screw it, I'm out.

astoriajoe's picture

I wonder what the credit scores of those Indonesian click farms will be.

As an advertiser, will you be able to buy reports on how many of FB's users are fake?

highandwired's picture

Good thing I don't partake in "credit"

mkkby's picture

Malignant is right.  Did you read the article.  It says if someone applies for credit they will CHECK THE CREDIT FILES OF ALL THEIR FRIENDS.  No privacy issue there, no, not at all.

HarryHaller's picture

Thumbs up for that point, but nothing a change or two in Facebook's EULA can't fix.

John_Coltrane's picture

You mean people actually use their real name and real email address on facebook?  That's so stupid.  Use a dead guys name for the irony-no one will be the wiser.  And yet you'll still get fake friend requests at your fake email account which you can just ignore.  Never use your real info online!  I'm guessing perhaps a majority of all accounts on facebook are fake!  But perhaps I underestimate the gullibility of the american public as PT Barnum once warned.




opport.knocks's picture

You're not the real John Coltrane? Bummer man.

Then who is getting the money I paid for this?


jakesdad's picture

825 - maybe I should list my facebook account on ebay?

ReasonForLife's picture

The credit based financial system is dying and "Fair" Isaacs' desperate attempt to squeeze the last opportunity out of it is quite obvious.  But hey, there's always the next lower tier, you have 2 arms and 2 legs?  You're approved!

markovchainey's picture

I give up.  ND, I'm creating a new screen name "TotalDebt".  I'm gonna borrow my way into complete and insolvent hell.  You can drive my Ferrari as long as you get here before the repo man!

WhackoWarner's picture

I read down most of the comments page and am astounded.


THE huge problem here is that "your social network" is now having their credit history investigated without their permission and without them directly applying for credit.


Am I wrong here?  Since when does FB or FICO have permission to crawl through my credit because Joe Blow applied for some car loan he is unable to afford?