Warning: Bank staff are trawling social media to catch unwary loan liars

While you might prefer to keep your personal and financial life separate, social media has blurred that line when it comes to applying for loans, with applicants warned that banks have started to trawl social media profiles for posts that may indicate you’re fibbing on your credit application.

‘Liar loans’, in which banks waved through what mortgage brokers often knew were falsified loan applications, were blamed for worsening the Global Financial Crisis. But banks have become much more cautious about lending since then and now are going the extra mile to fact-check the details in every home, personal and credit card loans application. Surprisingly, that fact checking can include reviewing social media posts to ensure applicants haven’t misstated their living arrangements, income or spending habits.

Mortgage broker Wendy De Graaf said she recently had a client rejected for a loan after their bank found a Facebook status of her client’s flatmate, who had jokingly put that the pair were in a relationship.

“My client is genuinely single but her friend had on their Facebook status that they were partners and the bank saw this information and rejected the loan because it didn’t match what was on her application,” De Graaf said. “I was shocked when they told me the reason for the loan rejection, it’s meant my client has missed out on buying her first home.”

Banks have a set of criteria that they check loan applicants against, but they don’t typically make that criteria public and do have the discretion to refuse loans as they see fit. That’s why Graham Doessel, CEO of MyCRA Lawyers, recommends that borrowers limit the amount of information that can be gleaned from their social media profiles.

“While the Royal Commission may have seemed like a free-for-all kick at the bank, in reality, a lot of it reflected poorly on borrowers too,” he says, in reference to some of the unwise consumer financial behaviour the banking commission uncovered. “Now banks not only are cracking down on their own behaviour but also on customers’ behaviour, which means it’s getting tougher for all of us to get finance.”

He advises wannabe borrowers to keep Twitter, Facebook, Instagram, LinkedIn and other social media accounts set to private to limit the number people able to see personal information posted on these platforms, get one of the free credit checks available to all Australians once every 12 months to ensure there are no surprise defaults on file, and be conscious where credit cards are used.

“Excessive use of food delivery services like Uber Eats, takeaway restaurants and online gambling will go against most people who apply for a loan,” he says of the tell-tale signs of profligacy that lenders look for on card statements.

“The bank already have a fully completed loan application form from you, which should be enough,” he says. “What’s the old saying? ‘Tell them what they need to know, not what they want to know’.”

IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial or legal situation, objectives or needs. That means it’s not financial product or legal advice and shouldn’t be relied upon as if it is. Before making a financial or legal decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services or legal advice.