Though it may sound a bit far fetched at this point of time, especially for us Indians, these methods of alternative scoring may be a reality for us, sooner than we can imagine. In technical parlance this kind of scoring method is reffered to as "big data scoring".
|Scooped by Simone Favaro|
What if your social network and your on-line footprints would be used to assign a credit score in order to limit the impact of financial events?
The idea moves from the observation that the common way to set a credit score is based on customer's financial behavior.
"[...] one must maintain good financial habits such as re-paying credit card outstanding amounts, keeping overall credit utilization under 30 per cent and re-paying loan installments on time. While there is no undermining the importance of maintaining these good financial habits, the fact remains that the current credit scoring system may "punish the guilty" with a "sentence that may be larger than one's crime"."
"In other words, there may be untoward circumstances in one's life like a job loss, an accident or a death in the family that may throw one's finances in a complete state of disarray. This in turn may lead to poor credit score because of his inability to repay his debt on time."
Now consider that your credit score will be based on your on-line reputation and your network. It will let you to be evaluated over your life cicle and not just over your temporary situation.
Even Facebook is moving on that registering a patent leting you to evaluate loan lending considering the lender's social network.