German news magazine Der Spiegel reports that Germany’s largest credit agency plans to mine Facebook and other social networking sites in search of information that could help the agency determine what effect online relationships may have on people’s abilities to pay their bills.

[… The credit agency] SCHUFA also plans to analyze information about people from other sites like the professional networks Xing and LinkedIn, Twitter, a personal search engine called Yasni, and Google Street View, [German TV broadcaster] NDR reported. The credit agency, according to NDR, plans to use “crawling techniques,” like those used by Google, with the goal of “identifying and assessing the prospects and threats.”

[…] There are approximately 20 million Facebook users in Germany, and SCHUFA has collected data on more than 66 million consumers. Until now, most of the information for the credit agency has come from partners like banks, insurances agencies, and businesses. […] According to NDR’s report on the confidential documents, the online texts could be analyzed “to determine the current opinions of a person,” and researchers could use Facebook, Xing or Twitter profile information to find the “addresses, and especially changed addresses” of other users.

While this may seem rather Orwellian – and “crawling” a social network may even be against the terms of use of those networks – should it come as much of a surprise?

If organizations use social networks as part of their assessment of potential employees, customers and others with whom they wish to engage, why would a financial services firm not want to do the same as part of their risk assessment?

If a credit firm like SCHUFA (motto in English: “We build confidence”) is able to embrace social media into its practices in a way that is transparent – meaning, ensuring everyone clearly sees what they’re doing and why – then I can’t see a huge issue.

Moreover, I can imagine such business practice being used far more in the future where forming a picture of someone will also embrace that someone’s online identity and activities.

However, I can also imagine the sensitivity surrounding how people perceive such business behaviour no matter how transparent it might be. Civil liberties and privacy advocacy groups especially will likely not be happy. Politicians too, no doubt, largely from data protection and regulatory perspectives.

Plenty of hurdles to surmount. Still, if SCHUFA and others get it right, it will be part of standard business practice within a few years. While that may be inevitable, I can also see the potential for stifling immediacy, informality, spontaneity… all the things that make people be, well, people. It will be a dark day if you have to keep an eye over your shoulder all the time to see where Big Brother is (this one, not that one)

Whatever develops with this, it’s a good time to ensure your online profiles portray you accurately, and are verifiable to your real-world identity. Oh, and check your Facebook timeline (and your other networks) for activities that you just know don’t show you in a good light.

• [Later:] In a tweet, David Carruthers said: “wonga.com have been doing that for some time. There is a great article it on Wired about 6 months ago.” He sent me a link to the article, published in May 2011: Cash machine: Could Wonga transform personal finance?

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• Should your employer have access to your Facebook account?
• Recruiters really care about your online reputation even if you don’t