While most people try to tell kids these days about the importance of being careful on social media—if even allowing kids to have an account at all—the idea that something said on a social networking site may impact the ability to get a loan is something that a lot of people didn't see coming. This is a trend that's got many consumer groups deeply concerned, and is even drawing some attention from regulators.

On a certain level, the use of social media in loan applications is making some sense, as found by lending companies. For instance, a listed job on a loan application can be more readily matched up to a post on LinkedIn, or if someone noted a job loss on Facebook, that can be taken into account. Additionally, businesses will prove no different; those businesses with outstanding social networking profiles may get access to better terms, while businesses with a large number of online complaints may find getting credit to be a harder prospect.

Right now, such a practice is limited largely to smaller companies offering smaller loans, and some of those companies note that using alternative metrics like that can be helpful for those with no credit or bad credit, who otherwise wouldn't have access to credit. But some—like Fair Isaac Corporation—may be taking a look at the issue in the future to use as one metric. Senior consumer credit specialist Anthony Sprauve with FICO noted: “There could come a time where certain social media could be predictive and we're looking at that, but it isn't yet.”

For businesses, the point of social media as a credit point can be particularly useful, as explained by Kabbage, a small business loan operation. Kabbage—which accesses users' social accounts like Twitter and Facebook as well as selling operations on eBay and Amazon and the like-- measures these social accounts and activities to see how well businesses are using online marketing tools, how well businesses are responding to customer concerns and issues online. Amazon, for example, is a good measure of this since it actively keeps track of a seller's history and overall responsiveness to issues.

There are valid points to such a process. Privacy concerns are a huge issue, as well as the possibility of lenders refusing credit to those who don't share certain political viewpoints or the like. Additionally, there's the issue of reliability and accuracy for the lenders in using social media. A potential loan applicant or employee could always tweak a social media page to present an idealized image that isn't necessarily so, while there's also the possibility that someone may set up a slanderous page purporting to be of the applicant or employee in question. The issue of common names also shows up; an applicant named “John Smith” might well have dozens of both positive and negative profiles available.

On some fronts, the use of social media in loan applications is valid, and actually smart. Particularly for businesses, which commonly don't have opinions about politics and the like, and can simply be checked for customer responsiveness and overall perception. No one wants to loan money to a business that will be gone in three months. But on other fronts, the practice may not only be unreliable, it may be outright useless and dangerous besides. It's the kind of thing that bears more careful consideration thanks to its potential advantages, but with so many potential pitfalls at hand, the risks seem to keep pace with the rewards.