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While we were on break, a story broke about credit that blew my mind.

Brace yourself for this: Watch the company you keep, because your Facebook friends can lower your credit score.

Some lending companies think that social connections on Facebook can be a good indicator of a person’s creditworthiness. One site, Lenddo, determines if you’re friends with someone who was late paying back a loan to Lenddo. If you are, it’s bad news for you. And it’s even worse if the tardy debtor is your best friend—the more you interact with them online, the greater the concern of the lender.

That sounds like it can’t be legal. And even if it is, it doesn’t sound ethical.

The truth is that we’ve all left more digital fingerprints than we can count, and companies are figuring out ways to capture those fingerprints and capitalize on them. What you do on your computer is being monitored and judged. Information gathered from eBay and Amazon are amongst the 8,000 data points another company uses when reviewing a loan application.

And Big Brother doesn’t stop there. Get this: Another company gathers information about potential loan applicants from the very moment you click on the website. If you spend time reading information about the loan, you are more likely to get one. If you fill out the application with all capital letters or with none, you’ve raised a red flag.

Is there any penalty for mixing up “your” and “you’re”? Because there should be.
These are niche lenders employing these techniques, but experts say it’s on the verge of going mainstream. But it’s not all bad. Sharing personal information with lenders could actually help you if they like what they see.

One small business lender gives debtors the option to link their Facebook and Twitter accounts to their site. Linking can come with perks because the small businesses who choose to link up are 20% less likely to be delinquent on their loans.

So what’s the final verdic? Do we need to de-friend that uncle who can’t keep the lights on?
Not yet. The vast majority of lenders still use the good old FICO score—that’s the traditional credit score that ranges from 300 to 850. They’re called “FICO Scores” because they’re generally produced from software developed by FICO (Fair Isaac and Company). Equifax, Experian and TransUnion are the Big Three. If you’re worried about qualifying for a loan in the future, do your best to raise your own credit score and let your friends—cyber and otherwise—worry about themselves.

Mellody is President of Ariel Investments, a Chicago-based money management firm that serves individual investors and retirement plans through its no-load mutual funds and separate accounts.  Additionally, she is a regular financial contributor and analyst for CBS News.

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