Online Reputation vs. Credit Rating: Which Matters More?

Like many people, you probably had dealt with a low credit score at some point. Whether it was for a home loan, car loan or whatever big-ticket item, waiting for the credit check when you have a less-than-ideal credit report can give a feeling of anxiety.

 

Credit Rating

 

By definition, a credit rating is “an assessment of the credit worthiness of a borrower in general terms or with respect to a particular debt or financial obligation,” (source). Typically, a company or the government hires a credit rating agency to conduct thorough credit assessment and evaluation either “for itself or for one of its debt issues.” Meanwhile, individual credit ratings are collected from credit history and conveyed by a numerical credit score maintained by credit-reporting agencies such as Experian and Equifax.

Changes in credit rating can have a crucial impact on financial markets as well as on the lender’s interest rates, so you need to strive to have the highest rating possible. In a nutshell, the higher the credit score, the stronger is the credit profile. And a strong credit profile generally results in lower lender’s interest rates.

Online Reputation

In today’s digital world, your online reputation functions the same way — only, there is no official tally associated with online reputation. Instead, employers, landlords, and government bodies screen out applicants for jobs, grants, loans, or anything imaginable through internet searches.

According to Reputation.com, these searches include “news articles, blog posts, social media profiles, ‘people search’ sites, public records, Wikipedia articles, automatically generated content, photos, [and] videos.” Basically, anything and everything that’s ever been published on the web.

Keeping your credit rating in tip-top condition is smart for business. But in an era where a person’s online reputation is becoming as critical as one’s reputation in the real world, how does one’s credit score measure up?

Online Reputation is the New Credit Rating

What is being said about you and how others see you on the web can put a lot of weight on your reputation. Regardless of your credit score, information on the internet about you can potentially “make or break your credibility to do business” as pointed out in an article on CNBC.

Your credit history is essentially a tracker that monitors your spending habits and behavior to show how disciplined you are in paying loans. Naturally, if you have a constant poor credit record, you will have a difficult time securing loans in the future. And fixing the damage with a few months of positive repayments will just not cut it.

Online reputation is cumulative in the same manner and just as stubbornly difficult to repair or alter as a credit score. At a click of a button, everything you have written, posted, or shared, as well as all the details that others wrote about you can be easily brought to light. By simply Googling your name or your business, your landlord, loan agent, or prospective employer can get a sense of your qualities in an instant.

In an interview, Karissa Spark, vice president of marketing at Reputation.com, said that more and more review systems from on-demand service apps like Uber and AirBnb are being developed both for business and consumer use. Ultimately these systems will be more powerful than our credit score, Sparks added. In fact, a 2014 Local Consumer Review survey from BrightLocal has revealed that 72 percent of consumers trust a local enterprise more after reading positive reviews about the company.

Apart from those recent ratings and review systems, what is being said about you or your business on news websites, social media channels, and e-commerce sites can also significantly affect your reputation.

Essentially, the credit worthiness of a person or business in the real world is often measured in terms of their financial reputation. In contrast, a business or person’s online reputation is frequently based on their social identity.

What Happens When You Have a Bad Online Rep?

A bad reputation in the virtual world has the same disruptive effect of a poor credit rating in the real world. But not everyone realizes its impact. Today, many enterprises still live in the “reputation oblivion” with no idea how to fix it, let alone maintain a positive one, said Reputation Lighthouse President, Bonnie Caver, in the CNBC article.

On the other hand, a good credit rating does not equal good online reputation. Just because you have a stellar credit score, doesn’t mean your online reputation problems will automatically go away. Businesses should realize that no amount of acceptable credit score can repair the holes in a beaten online reputation. In order to keep a reputation in good repair, you have to dedicate a good amount of your time to monitor, track, and respond to consumer feedback and comments.

To repair a bad reputation, Caver suggests to do the following:

Determine if the bad reviews are a one-time incident or rooted from a larger concern.

 

Monitor your channels and accounts.

 

Find out what your community is talking about and inject some views into them.

 

Create a powerful online content to regain control of the situation.

 

Encourage transparency.

 

If these tasks seem too complex, you can always hire a reputation management firm to assist you in your pursuit of building a positive online rep.

Indeed, online reputation has become one of the primary determinants of whether or not you gain access to a safe rental housing, a well-paid career or an affordable home mortgage. While it may seem that people are not searching for you, there’s a good chance that they are, so it’s wise to be vigilant at all times. With today’s consumers and companies becoming increasingly dependent on the internet for information, it’s only a matter of time before our credibility completely relies on our digital footprint.

 

What do you think? Do you believe credit score is still king or has online reputation surpassed it?

 

Image credited to Pixabay

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Alexandre Coussy

Digital Marketing Technologist at Coucou Marketing
Alexandre (@alex_coussy) loves to measure business success through digital strategies and technologies that are fuelled by analytics, automation, content, social media and CRO.

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