Blockchain-Based Credit Scoring Outshines “The Big Three”

2 min read


One of the top news stories in 2017 was the Equifax data breach that impacted nearly 148 million consumers, compromising information like Social Security numbers, names, address and tax ID information. [1] It was incredibly damaging, preventable and the company took a staggering six weeks to notify the public about the breach. Even the website offering free credit monitoring that was launched in response was littered with security vulnerabilities. [2] While Equifax’s business and reputation took a hit, not to mention the impact it had on their customers,  there aren’t a lot of other options for traditional consumer credit scoring. Equifax, Experian and TransUnion, affectionately known as “The Big Three,” aren’t the only credit scoring bureaus, but they’re certainly the biggest. Experian alone maintains credit information on 220 million people. [3]


Credit scores can dictate a person’s involvement in the financial system, including loan or mortgage approvals, interest rates and insurance rates. It can even impact things like someone’s ability to rent an apartment or secure a credit card. [4] One of the major problems with traditional credit scoring is the process itself. It relies heavily on previous loan repayment, which is an obvious problem for the 3.5 billion unbanked and underbanked people across the globe who lack access to formal financial institutions and, by default, loans. Therefore, they are largely considered “credit invisible” and unscorable. [5 & 6]

Enter blockchain-based credit scoring for microfinance lending. By boosting credit scores through micro-loans amongst Colendi users, unbanked individuals suddenly are able to participate in the formal financial system. Microloans, which are often used to purchase food, toiletries, and other necessities, enable users to create or increase their credit without taking large financial risks. Not only will this impact users in the short term, but it will set them up with the ability to make larger financial transactions down the line.


As a decentralized credit scoring and microcredit protocol, Colendi brings this technology to anyone with a smartphone. By using over 1,000 unique indicators of a users credibility, Colendi is able to calculate credit scores via its decentralized credit scoring algorithms in a uniquely holistic manner. These predictive metrics look at everything from social media to shopping history in order to create a universal digital identity and comprehensive credibility profile. By using blockchain technology, the scoring algorithm is capable of learning, evaluating and mobilizing credibility scores. Moreover, Colendi realizes the strengths of the blockchain technology which enables to carry out in a trustless, decentralized, immutable manner. From there, Colendi facilitates peer-to-peer transactions that enable previously unserved and underserved individuals to take the reins of their own finances.

Blockchain-based credit scoring is changing the landscape of a historically exclusive and corporate-dominated industry by understanding the underbanked and protecting the consumer. By extending credit to the unbanked and underbanked, Colendi is helping to make financial services accessible to all by giving users a financial identity and equal financial access to banking systems, all while keeping their personal information secure and under their control.


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