Loan provider Amigo said it was already aware of payday lenders using social media to decide whether to lend to a customer. Its research has found almost three-quarters (70%) of consumers are unhappy being judged in this way.

The study found 36% felt using online profiling was an invasion of privacy while a further third (34%) said the prospect left them feeling uncomfortable.

A spokesperson for the Council of Mortgage Lenders told Mortgage Solutions the trade body was not aware of this practice taking place in the mortgage industry and expressed doubts over whether social media profiling could be used to judge a mortgage application.

Amigo also found more than three-quarters (77%) of consumers felt lenders would be unable to make an accurate decision based on a social media profile. In addition, almost half of borrowers would consider deactivating their social media profiles to avoid being judged in this way.

Borrowers were most fearful of lenders seeing photographs of them posted online with tracking of location and status updates the next biggest fears. Further worries were expressed over how comments of others left on their profile could affect lending decisions.

James Benamor, founder of Amigo Loans, said: “It’s no wonder borrowers aren’t happy about this. Lenders should only be judging if someone is credit-worthy by their ability to pay a loan back.

“This use of social media is also a worrying sign of further exclusion of those already marginalised by traditional credit scoring. The term ‘mainstream credit’ is already becoming a contradiction, with an increasing number of borrowers being forced to look elsewhere because the banks are turning their backs on them.

“We firmly believe that reverting back to the old-fashioned approach of actually speaking to potential borrowers is how lending decisions should be made.”