Is your email address wrecking your creditworthiness? A recent study found that a person’s digital footprint can predict their financial behavior.
Did you know your cell phone or email address can reflect your creditworthiness and might limit your ability to take out a mortgage?
According to a recent study from Frankfurt School of Finance & Management, after 250,000 observations they found that an individual’s digital footprint (user information left online by accessing or registering on a website) equals or exceeds the information content of credit bureau (FICO) scores when it comes to predicting behavior. The results of the study illuminate how our browsing data can be used.
And, while it’s fascinating, it’s also somewhat frightening.
The study found that when it comes to determining creditworthiness through a digital footprint, a huge factor is the type of device a person uses. Android users are twice as likely to default on a loan than Apple users. In fact, the study found that Apple device ownership is, “one of the best predictors for being in the top quartile of income distribution.”
Purchasing behavior on a mobile device is also indicative of future financial missteps. According to the study, those who purchase items through their mobile phone are three times more likely to default than those who made their purchases on a desktop or tablet.
The type of email address used also matters when predicting creditworthiness. Those who use a Yahoo email address are twice as likely to default on a loan, and those with Hotmail email addresses are almost 1.5 times more likely to default than others. Those users who have their first and last name in their email address are 30 percent less likely to default than others.
Increasing the “creep factor,” the Frankfurt School of Finance & Management found that those who fail to use capital letters when filling out their name and shipping information for purchases are twice as likely to default.
Even the time of day a purchase is made can determine likelihood to default. Purchases made between noon and 6 p.m. are half as likely to default versus purchases made between midnight and 6 a.m.
What’s this information going to be used for? Lenders could complement FICO scores with digital footprints to improve predictions, cut costs and speed up processes.
What does this information mean for you? Massive machine learning tools can be built that can easily scrape the web to find out where you’re spending money and how you’re spending it. So, think twice before you buy with your phone late at night. And, watch how companies are putting digital footprints to use.