Ken Lin is the CEO of Credit Karma , a free credit management service that provides credit scores, personalized savings recommendations and financial education tools. You can follow Credit Karma on Twitter @CreditKarma and read its blog here

Many Americans may be unaware that their social media conversations and posts are providing banks and lenders with a treasure trove of information. In fact, a growing number of banks and lenders are currently building a data repository – collecting, storing and analyzing data – in the hopes that one day it could help them determine your potential credit risk and also tailor marketing directly to you.

The earliest we’ll see banks and lenders begin to act is five years down the road, once they’ve had time to evaluate and correlate specific social media behaviors to actual credit risks. For example, tweeting about walking away from your home may translate as an indicator that you may be delinquent on a future loan. Now banks are doing the math to determine whether these kinds of comments or tweets actually prove true down the road.

Bottom line, if banks and lenders can prove that using social media data as a business tool is successful in assessing behavioral patterns and preventing future losses, then why wouldn’t they?

Marketing Will Change; Underwriting May Not

At the very least, banks will use this information to tailor their marketing efforts, even if the underwriting process doesn’t change. For example, a bank may choose not to show John Smith an advertisement for their latest credit card if he recently tweeted about declaring bankruptcy. Instead, he may see an ad for that bank’s pre-paid credit card.

Banks want to focus on bringing in the most qualified customers, and are trying figure out new ways to reach that goal. Social media presents this opportunity. Underwriting, a bank or lender’s assessment of the eligibility of a customer to receive their products, may not change just yet, however. After all, banks can’t tell Congress they denied someone a loan because their “social graph” wasn’t optimal.

What Banks and Lenders Will Be Looking For

Anything indicative of changes in your financial circumstances . These may include phrases or keywords that you use on social media platforms, such as walkaway, laid off, fired, broke, moving to your parents house, etc. Banks will examine the correlation between these tweets and actual financial behaviors.

What your social media connections are doing financially . The idea here is that your friends have similar habits and characteristics as you. If one of them tweets about financial hardship, to banks that could mean you might also have trouble later on. UCSD professor James Fowler explores a similar concept in a study about divorce: Being friends with someone who gets divorced makes that person 147% more likely to get divorced themselves.

Upcoming life changes. Similar to financial changes, the idea here is that banks want to know when you’re approaching major life events, such as getting married or buying a safe car to transport your new child. This information allows banks to tailor certain products and services toward you.

Advice for Consumers

Know your privacy settings . Always remember that anything you say in the public domain is never truly anonymous. To lessen the number of people who can view your posts, be sure to set all of your privacy settings appropriately.

Think before you post . Even though you may be excited about getting married or upset over losing a job, remember that it could come back to haunt you.

Keep in mind that everything can be traced back to you. One of the most overlooked aspects about posting on social media platforms is that the Internet has made it easier than ever before to trace things to the source. That means pictures, wall posts, status updates, and even “anonymous” blog comments.

Banks Check Up On You in Different Areas of Your Life

Of course, social media isn’t the only place banks and lenders are digging around for additional information on you. They are also interested your income, the value of your home, whether or not you pay your rent or utility payments on time, and even if you’ve stopped receiving direct deposits.

Income estimation : Credit bureaus can use credit information to determine your earnings based on previous loans and credit card limits. The Federal Reserve now allows lenders to use income estimates to determine that credit card applicants have the ability to pay. Banks are increasingly looking at these figures before granting credit.

Home values : If your home is underwater (you owe more on your home than what it is currently worth), banks and lenders may be more hesitant to give you new lines of credit since they worry about being able to recoup losses from your tangible assets.

Rent payments : These are not currently factored into credit scoring models (Experian is looking to change this), but could provide banks and lenders with enough information to assess credit risk on a thin credit file.

Bank deposits: If your bank deposits stop suddenly, this may constitute a red flag to a bank or lender who may assume you lost your job or your source of income. Banks will pay special attention to this because it could help identify which of their customers may need special attention.

In the end, consumers should be aware that any public information is fair game in this economic environment, and social media may be the newest cautionary landscape.

Image courtesy of iStockphoto, AnikaSalsera