CREDIT SCORES using the blockchain. Wow! About time fintech tackled this confusing sector. Credit scores, a long antiquated and UN-transparent rating system used to rank consumers ability to borrow (and repay), may be getting a new makeover. The Royal Bank of Canada has a patent application filed for a platform that will be able to automatically 'spit out' credit ratings by using a borrower's historical data. RBC's platform will redesign the whole credit rating system which will make it much more transparent and easier for consumers to understand their scores. Meaning, a much more accurate score since much more data will be included and, I assume, be more current and updated with greater frequency. Being a consumer driven economy this should be a big boon to lenders and borrowers. The more data the more accurate the credit score and a whole lot easier to understand. Sounds like a "win-win" for all. Grant that patent.
(Bill Taylor/Managing Editor)
"The Royal Bank of Canada may be interested in putting credit scores on a blockchain.
In a patent application released Thursday, the bank outlines a platform built on a blockchain that would automatically generate credit ratings using a borrower's historical and predictive data. The application as described proposes a system that would utilize more data sources than existing credit rating systems, improving the loan process while creating an immutable record.
Notably, the RBC patent application indicates that it would redesign the credit rating system to provide more transparency for users to understand how their scores are calculated. Further, adding this new level of transparency would help users improve their scores more quickly than is possible at present, according to the filing.
One way the system could work is by using marketplace information to analyze loan offers based on existing credit histories.
The application explains, "In another aspect there is provided a system for credit and digital identity records with a distributed ledger of a plurality of nodes, each node including at least a computing device, and the distributed ledger having a plurality of blocks, each block comprising identification data linked to a set of identifiers for an individual, transaction data, a timestamp indicating when the block was created, and a hash reference for the distributed ledger..."
Source: Coindesk