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Are lenders determining credit-worthiness based on your smartphone habits? Maybe.

Shopping for a small-business loan? Lenders are now using social media and smartphone habits (including who you are texting, GPS locations and check-ins) to determine your worthiness.

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iphone social media texting teen

iphone social media texting

Big Brother is watching (and judging)

Not too many years ago, when America wasn’t nearly as socially conscious or politically correct as it tries to act now, it wasn’t uncommon for financial institutions to refuse a mortgage or a loan to someone based on how ethnic a neighborhood they lived in or wanted to live in. The proper term for this type of thing is redlining and it was not an unheard of practice throughout the 20th century.

You’d think in the new millennium we would have outgrown that kind of baseless stereotyping but thanks to technology, banks can take redlining and really get creative with it: with the help of dozens of new watchdog apps, financial institutions can track your spending habits by the reams of data your smartphone spits forth day in and day out.

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You’re leaving a trail

Consider this: according to recent Wall Street Journal article, the apps that smart phone’s are so vigorously tied to generate huge amounts of data like texts, emails, GPS coordinates, social-media posts, retail receipts, and the like which in turn indicates a myriad of subtle behavior patterns that correlate with loan repayment or default.

Even obscure variables such as how frequently a user recharges their phone’s battery, or how many incoming text messages they receive can impact a decision to extend credit.

It’s all about who you know

As scary as the smartphone scenario is (and to a degree it is currently being used by lenders in emerging-economy countries like Kenya) the real shocker is the potential that for lenders to use a social media platform like Facebook to create a financial profile of an individual based on that person’s social network.

Like, if your friends are well-off that’s a good thing and your loan will be approved versus if your friends with a cross-section of individuals living in a swamp somewhere and braced for the apocalypse.

Is this upholding the Equal Credit Opportunity Act?

The web version of The Atlantic spoke with Aaron Rieke, the director of tech policy at Upturn which consults civil-rights and social-justice groups on how to understand and use technology. Rieke, to his credit, understands the benefits and impacts of technology.

Says Rieke, “In the long term, it’s hard for me to imagine a future in which we’re not using more types of data to make more types of decisions.

But in this case, creating a financial profile based on a person’s social network or smartphone habits is like playing with fire and goes against the very thing that the Equal Credit Opportunity Act was created for: preventing the collection of information about consumers and then selling that information to be used to impact credit and employment decisions.

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Business Finance

Get outstanding invoices paid to you by following these 7 steps

(FINANCE) For a freelancer, it’s more important than ever to bring up the issue of getting paid on time. Here are 7 tips to get your money.

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Handing over card representing getting paid.

For many, an awkward topic of conversation revolves around getting paid. Whether asking for a raise or asking to borrow money, people often feeling uncomfortable when talking money.

This is equally, or possibly even more so, true for freelancers who are solely in charge of their finances. Without a system of weekly direct deposit, freelancers have to work overtime to keep their earnings in order.

The issue with this is that clients also have a lot on their plates, and something as simple as a freelancer’s paycheck is common to fall through the cracks. This causes freelancers to have to work friendly reminders into their repertoire.

However, freelancers may not always be knowledgeable of the best ways to keep their finances in check (no pun intended). Below are seven ways to enhance payment methods.

  1. You have to be willing to make billing a priority. Due to the fact that money is awkward to talk about, as aforementioned, many let this fall by the wayside. The best way to do this is to keep up to date with your invoices and send them as soon as they are done. Making a calendar specific for billing can help with this idea.
  2. This second bit dates back to when we were young and learning our manners: it is crucial to be polite. Not only is it the right thing to do, but it also increases speed in payment. Using “please” and “thank you” in invoicing emails are said to get you paid 5% faster.
  3. It is best to try and keep a complicated concept like finance as simple as possible. Make sure you are creating specific due dates. This will help to signify importance of payment.
  4. Now that virtually anything can be done online, it would make sense to use electronic payment verses an old-school check. Accepting online payments will get a user paid, on average, eight days faster as opposed to a check.
  5. This is an important notion to keep in mind for any aspect of your business life: be professional. Invoices are often seen by many eyes so it is best to include your business’s logo on said invoice. This has been found to increase chances of being paid on time by 10%.
  6. Specificity is urged again in the form of transparency. Make sure you are giving detailed descriptions on each invoice so that anyone looking at it knows exactly what you are being paid for. By doing this, you are 15% more likely to be paid on time.
  7. While you may be invoicing month by month, try to avoid sending on the 30th or 31st. Being that everyone, generally, sends their invoices in on these dates, it takes 10 – 20% longer to be paid. With everyone sending it at the end of the month, it has a tendency to back up payroll.

The most important thing to remember is that while the topic of money may be awkward, it is your money. If you let a few invoices fall behind because you are uncomfortable reminding your client, this has a way of adding up. Be sure to keep on track with your finances to earn what you are working for.

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Business Finance

Why you will pay more to live in larger metros: job opportunities

(BUSINESS NEWS) Small to mid-sized metros offer higher adjusted salaries, but don’t pack your bags just yet because your job may not be there

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small metros cheaper house

When I told my parents how much my partner and I would be paying for rent at our new apartment, they quickly pointed out that I could purchase a home for that kind of money in my hometown.

My parents are right, I could literally buy a home for the amount of money I pay in rent every month to live in a large metro area. But the equation that determines where I and many other workers should live, is more complex than salary minus housing.

These areas are cheaper to live in, in part, because they may not offer the kind of job opportunities, and therefore social mobility, you see in larger metro areas. Sure, I could make my money go further in my hometown, but the chances of me finding a job in my industry there are smaller.

Your field of work does matter when considering whether or not the “small-city advantage” could work for you. If you work in tech or finance, two traditionally high-paying fields, then this advantage doesn’t apply.

“Before adjusting for living costs, typical technology salaries are 27% higher in two-million-plus metros than metros with fewer than 250,000 people. Even after adjusting for those costs, tech salaries are still 5% higher in the largest metros than in the smallest ones,” finds Indeed.

If a huge tech company offering thousands of high-paying jobs moved into a smaller city on the map, over time, it would get more expensive to live there.  It’s the hamster wheel that is currently driving income inequality in some of America’s largest major metro areas.

Finding the right place to call home is never going to be a single factor decision. Yes, salary is a huge factor, as is the cost of living, but there are also lifestyle factors to consider. What kind of opportunities would you have in this city? How much will it cost to move there? How will this affect the other members of your household?

It’s nice to play the ‘ditch the corporate world and buy a country house’ fantasy after a long day at work, but the reality is far more complex.

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Business Finance

How to win over investors immediately with a great 1st impression

(BUSINESS FINANCE) First impressions are everything, and it’s no different when it comes to approaching investors. We have the tips to win them over.

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first impression handshake with investors

Going in for your first pitch meeting with investors can be nerve-wracking – especially if you haven’t yet met these investors in person. Fortunately, if you land a solid first impression, you can set the right tone for the meeting, and make the rest of the presentation a little easier on yourself.

But why are first impressions so important, and how can you ensure you make one?

Let’s start with a recap of the benefits of a strong first impression:

    • A reputation framework. Our brains are wired to make quick judgments about our surroundings. Accordingly, we tend to judge people based on our first interactions with them, with little opportunity to change those initial judgments later on. If you strike investors as a smart, likeable, and capable person early on, they’ll see your pitch deck in a whole new light.
    • Memorability. First impressions stick with people. If yours stands out from the other entrepreneurs pitching these investors, they’ll be more likely to remember you, specifically, and therefore may be more likely to eventually fund your project.
    • Personal confidence. If you know you’ve nailed the first impression, you’ll feel more confident, and as you already likely know, confidence makes you a better public speaker. You’ll speak more deliberately, more passionately, and with fewer mistakes.

So how can you make sure you land this impression?

    • Arrive in a nice vehicle. Show up in a luxury vehicle, or at least one that’s been recently detailed, sends a message that you’re already successful. This isn’t a strict necessity, but it can speak volumes about what you’ve already achieved, and how you might look when you drive to meet your future clients.
    • Dress for the occasion. Along similar lines, you’ll want to dress nicely. You don’t need to have ridiculously expensive clothes, but you should wear standard business attire that fits you properly and has no signs of wear. It’s also a good idea to get a haircut, shave, wear tasteful makeup, and make other small touches that improve your overall appearance.
    • Smile. Smiling is contagious, and it instantly makes you more likable. Don’t force a grin (or else you’ll look like a robot), but do flash a genuine smile as often as appropriate during the first few minutes you meet your prospective investors.
    • Use your investors’ names. When you speak to your investors, try to address them by name as often as possible. People love to hear the sound of their own names, so it might help you win their favor. As an added bonus, it will help you reinforce your association with their name and face, so you eliminate your risk of calling someone by the wrong name later on.
    • Warm-up with something personal. It’s tempting to get down to business right away, especially because your investors’ time is limited, but in most cases, it’s better to warm up with something personal—even if it’s only a few lines of a conversation. Tell a funny joke you heard earlier in the day, or share an anecdote about how your morning has been going. It makes you seem more personable and charismatic.
    • Find a common link. If you can, try to find something in common with each of your prospective investors. You might comment that you got your tie at the same place they did, or that you use the same type of pen. Look for subtle clues about their personalities, lifestyles, and hobbies, and forge a connection through those channels. People disproportionately like other people like them, so the more commonalities you can find with your prospective investors, the better.
    • Watch your posture. Your posture says more about you than you might think. Keep your back straight with your shoulders back, and walk confidently with your hands out of your pockets. This is crucial for projecting confidence (and feeling it internally as well).

If you can land a great first impression, you’ll set the stage for a killer presentation—but don’t think you’re out of the woods yet. You still need to make sure you have a fantastic pitch deck in place, and enough knowledge on your startup idea to handle the toughest investor questions. If this is your first pitch, don’t worry – it does get easier – but the fundamentals are always going to be important.

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