The concept of social credit scores, traditionally associated with government mandates in countries like China, is increasingly being discussed in the United States, with some lenders already utilizing social media data to assess creditworthiness. This development has prompted discussions among state lawmakers and analysts regarding the potential for private sector entities to implement behavioral ratings.

Social Credit Scores and Lending Practices

In the United States, traditional credit scores are determined by five factors and do not currently incorporate online activity. However, a report from the Wall Street Journal indicates that some lenders have begun using platforms such as Facebook to verify the identities or worthiness of loan and credit applicants. This practice is not new for some lenders, who are using social media profiles and activity to determine an applicant's "social credit score" and assess their risk for a loan.

Research conducted by The Wharton School of the University of Pennsylvania suggests a growing number of credit companies are employing social media data to evaluate the credit risk of applicants. This trend highlights a shift in how financial institutions might assess individuals beyond conventional financial metrics.

Concerns and Legislative Responses

The potential for social credit scores to become more widespread in the U.S. has raised alarms among some state lawmakers. These lawmakers express concern that the United States may be following China in imposing behavioral ratings on its citizens, particularly as new technology for tracking behavior and generating environmental and social credit scores develops. States are reportedly fighting back with laws designed to ban political discrimination by banks, aiming to combat environmental and social credit score technology.

Jonathan Williams, Executive Vice President and Chief Economist at the American Legislative Exchange Council (ALEC), a membership organization for state legislators, was featured in a story by The Epoch Times regarding social credit scores potentially reaching the United States. Williams noted that while the U.S. government does not have the power to mandate such systems, progressive control over the financial system could lead to an erosion of freedoms without new legislation. He cited companies with a "radical take on ESG" or FICO personal credit scores as examples.

Analysts warn that social credit scoring could emerge in America not through government mandates, but through the private sector, specifically banks, insurance companies, and tech companies. They point to signs indicating this process has already begun.

The Private Sector's Role in Social Credit Technology

The technology for social credit systems is already in existence. While China is noted as the first proving ground for a society-wide social credit system, the growing availability of data on social behavior is considered too valuable for powerful entities to ignore. This suggests that some form of social credit scoring, whether smaller in scale or more ambitious, is likely to impact American society.

The Zeus Equity Group has published an article, originally on Entrepreneur.com, discussing how U.S. entrepreneurs can capitalize on the coming "social credit" technology. This perspective suggests that the private sector views the development of social credit systems as an opportunity, further indicating the potential for its expansion outside of government control.

Key Facts

  • Some U.S. lenders are using Facebook and other social media to verify loan and credit applicants.
  • The Wharton School of the University of Pennsylvania has researched credit companies using social media data for risk assessment.
  • State lawmakers are introducing laws to ban political discrimination by banks to counter social credit score technology.
  • Jonathan Williams of ALEC highlighted concerns about private sector influence on social credit scores.
  • Analysts suggest social credit scoring could come to America via banks, insurance, and tech companies.
  • The technology for social credit systems is already available.