Social pages, tweets don’t lower credit scores
The Internet is being filled with bogus reports that lenders are reviewing their applicants’ online activity and tweets before approving or rejecting a mortgage application.
Q. I have seen a number of stories lately that say U.S. banks and credit bureaus are now researching loan applicants on the potential borrowers’ Facebook and Twitter pages, and that the credit bureaus automatically will lower the applicant’s credit score or the lender will deny the loan if they don’t like what they see. Is this true? If so, would it be illegal?
A. I have seen those same reports in the past few weeks, but they are not true.
The latest rumor, which has been appearing all over the Internet, is that lenders and credit bureaus are checking out an applicant’s Facebook, Twitter and LinkedIn pages to see who his or her online acquaintances are. The theory, sums up CreditSesame.com credit expert John Ulzheimer, is based on the old saying “birds of a feather flock together.” If a lot of your online pals are deadbeats, the hypothesis goes, chances are that you will become one, too.
The rumor, Ulzheimer and most other experts agree, is completely bogus. For starters, credit scores are based on the information in your personal credit report — and your report doesn’t include a list of your social media contacts. Besides, it would be costly (and perhaps even illegal) for a bank or other creditor to order separate credit reports on your Internet buddies in order to determine whether your own loan request should be approved or denied.
It’s true a handful of creditors have suggested that they might have researched some applicants’ social-media pages, but they still depend largely on a borrower’s personal credit record and score when making their lending decisions.
There’s another reason why banks likely will never put too much stock in the people with whom an applicant stays in contact over the Internet: Because consumers retain complete control over their social-media pages, it would become easy for them to boost their scores by simply “defriending” those with lousy credit records and adding even the most casual acquaintances who have sterling payment histories.
Q. I am in the process of applying for a mortgage to buy my first house. I work for a big company that is having some financial trouble, and I’m not sure if I’ll have my job much longer. Fortunately, I have been offered another job at a different firm that pays a little more and seems to be doing better than the company I work for now. If I take the new job, will it hurt my chances of getting a mortgage loan?
A. It’s hard for me to answer your question, because I don’t know much about your personal financial situation or the policies of the lender you have chosen to finance your purchase.
As a general rule, lenders frown on borrowers who change jobs in the middle of the application process, especially if the borrower is going into a new line of work without getting a big pay raise. However, taking a job in the same industry for a stronger company at higher pay should only bolster your prospects of getting the mortgage.
Discuss your concerns about a possible job change with your lender or mortgage broker. If the lender doesn’t mind that you change jobs now and you’re sure that the new company is stronger than your current one, I’d lean toward taking the new job opportunity and signing the mortgage papers.
But if the lender says it won’t give you a loan if you switch jobs now, think twice about going through with the home purchase. If your current job is in jeopardy, it wouldn’t make sense to buy a new house with a loan that you couldn’t pay back if you get thrown out of work a few months from now.
Q. We just paid $2,750 to repair some termite damage to our home. Can we deduct this amount on our next income-tax return?
A. Sorry, but no. The Internal Revenue Service only allows deductions for the damage, destruction or loss of property that is “sudden, unexpected or unusual.” It specifically labels damage caused by termites or moths as “progressive deterioration,” which means the cost of repairing it isn’t tax-deductible.
For more information, get a free copy of IRS Publication 547, Casualties, Disasters and Thefts, by calling the agency at (800) 829-3676 or by downloading it from www.irs.gov.
Real estate trivia: About 45 million people live in caves today, researchers at the United Nations say, with about 30 million of them in China but fewer than 100,000 in the U.S.
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© 2013, Cowles Syndicate Inc.