TALKATIVE people pay back loans. The very talkative default. Too taciturn is no good either. Also, don’t take out a loan at 4 a.m.

    Those are lessons from online lenders in China that are tracking people’s behavior — via apps on their mobile phones — and taking it into account when deciding what their credit ratings should be. Chinese consumers don’t mind handing over personal details that would spark outrage in the West, in exchange for lower interest rates.

    WeLab Ltd., a Hong Kong-based online lender that makes loans in China, looks at what apps people have downloaded, where they go using the phone’s GPS tracker, their social networks and their school records. It offers discounted interest rates for each extra piece of personal information that helps profile customers for credit ratings.

    In Hong Kong, for example, giving WeLab access to a Facebook account gets a 5 percent discount on the cost of a loan, and access to LinkedIn gets you 10 percent off, on loans with interest rates that otherwise reach as high as 20 percent.

    “Chinese people have no issue handing over their personal data, giving you their credit card number, giving you their bank account,” said GGV Capital’s Shanghai-based managing partner Jenny Lee, whose Silicon Valley venture capital firm has invested in data-hungry tech giants such as Alibaba Group Holding Ltd. “Look at the whole Internet finance sector, people are giving you their bank statement so you can do profiling.”

    Some are perhaps over-sharing. University students desperate for cash have been sending nude photos of themselves as collateral to several online lending platforms.

    New methods

    Evaluating people using their phones is just the application of technology to what’s always gone on in the past, and the data shared is now voluntary, according to Simon Loong, WeLab’s co-founder and CEO.

    “Before when you wanted to get a loan, you’d go to the bank, and the banker could look at how you combed your hair, what shoes you wore,” said Loong, who used to work in the personal loan and credit card businesses of Citigroup Inc. and Standard Chartered Plc. “The behavior of your phone shows your personality.”

    Visual profiling was inconsistent and hard to roll out widely, he said. Credit bureaus fill the gap in developed economies but still don’t cover everyone in developing economies like China.

    WeLab’s technology has helped fill in the blanks, drawing investor interest including from Asia’s third-richest man Li Ka-shing, ING Groep NV, Sequoia Capital, Malaysia’s Khazanah Nasional Bhd. and Chinese State fund Guangdong Technology Financial Group. In January, the company raised US$160 million.

    Other Chinese data miners have drawn global investors, too. Shanghai-based China Rapid Finance uses data collected from Internet company Tencent Holdings Ltd. to pre-approve millions of potential borrowers based on the frequency of their instant messaging, the number of online friends, how long they’ve had their phones and their mobile shopping and gaming habits. Private equity firm Broadline Capital of New York has led a funding round, and the lender is planning an initial public offering.

    Probing the digital trail certainly isn’t confined to China. Data mining has become commonplace among U.S. retailers.

    Big-data analytics, already a US$16 billion industry in the United States is forecast to be the fastest-growing software segment by revenue, reaching US$23 billion by 2019, according to International Data Group’s IDC. Lenders in the U.S. faced regulatory hurdles in factoring in social media to determine credit worthiness, and Facebook Inc. made it tougher for outsiders to monitor posts, the Wall Street Journal reported. (SD-Agencies)