Klever
  • Home
  • Global
  • Exchange
  • Wallet
  • Education
  • NFTs
  • Announcements
  • Opinions
  • Marketcap
No Result
View All Result
  • Login
  • Register
Klever News
  • Home
  • Global
  • Exchange
  • Wallet
  • Education
  • NFTs
  • Announcements
  • Opinions
  • Marketcap
No Result
View All Result
Klever News
Home Global
crypto lending

Does Crypto Lending Affect Your Credit Score?

There is a growing demand for educating people about financial intelligence, like credit scores and how they can move all their knowledge from traditional finance to the digital finance system.

by James Enajite
June 16, 2022
in Education, Global, Opinions
Reading Time: 4 mins read
563
A A
0
Share on FacebookShare on Twitter

Increasingly, all global citizens regardless of their nationality, region of origin, or economic status are now empowered by blockchain and peer-to-peer technologies to take part in building digital economies powered by decentralized networks called blockchain technology.

Due to its anonymity, trustlessness, and security, it allows transnational transactions to be conducted anonymously and securely online.

You might also like

Klever joins Web3 Domain Alliance to advance blockchain naming ecosystem

Klever joins Web3 Domain Alliance to advance blockchain naming ecosystem

February 22, 2023
7.4k
Klever Wallet: A Secure Solution for Managing Your Crypto Assets

Klever Wallet: A Secure Solution for Managing Your Crypto Assets

February 14, 2023
7.4k

The level of financial intelligence from the traditional financial system is considered to be very low as most people, especially from poorer countries, practically stay away from the intricacies of understanding how this financial system works.

As a result, a greater number of people have become impoverished as most financial companies tend to complicate matters surrounding the field of play when it comes to money matters.

As a result, more and more people, especially those in the third world, are being left out of the banking system.

It is vital, however, for users to gain a basic understanding of credit scores from the financial perspective and to be able to translate them into the crypto arena for them to take part in the financial revolution taking place recently.

What is a credit score?

By implication, a credit score is a number that translates a user or consumer’s creditworthiness. The higher the score an individual has with their financial body, the better a borrower looks to potential lenders. 

Alternatively, a credit score can also be defined as a score or number determined by a proprietary mathematical algorithm that helps lenders predict the individual propensity to pay back loans.

Usually, a credit score is based on some factors which include users’ credit history: by implication, this includes the number of open accounts, total levels of debt that is associated with the user or individual, and level of repayment history, including other factors. 

How does a credit score work?

A credit score can significantly affect your financial life such that it can determine if an individual can be termed creditworthy to own properties or buy some essential equipment for their household use and so on. 

It plays a fundamental role in facilitating a lender’s decision to offer the customer or user some credit. There is a scoring system that is applicable generally ranging from 300 to 800 (300-800) such that people with credit scores below 640 in this case are generally considered to be subprime borrowers (They are seen as people who would unlikely be able to repay their loans). 

Lending institutions often charge interest on subprime mortgages at a rate higher than the normal mortgage in order to accommodate the associated risk.

However, a credit score of 700 or above is considered good and may result in a borrower receiving a lower interest rate, which results in their paying less interest over the scheduled period of the loan. Then there are those with scores greater than 800 that are considered excellent (Creditworthy). 

Is credit score applicable to cryptocurrencies?

Cryptocurrencies work similarly to physical money or fiat from traditional finance systems,  because they have value because people agree to use them as a means of exchange. 

However, they’re different in the sense that they’re virtual or dependent on computer algorithms developed using blockchain technology. Cryptocurrencies can be used in almost all forms of financial transactions and instruments, for example, lending, staking, borrowing and so much more. 

Although the traditional financial system is controlled by a central body, cryptocurrencies are developed and programmed to run without a human or a central authority for it to execute the transactions.

Is it possible to implement a crypto lending system?

This is a possibility in the crypto space which brought about the terminology Decentralized Finance (DeFi). Such smart contracts were developed to execute commands that would facilitate financial transactions in a decentralized way and give opportunities for global players all over the world to participate,  leveraging their cryptocurrencies against access to funds borrowed for other purposes. 

This has created more opportunities and opened the crypto world into what is actually possible in the traditional finance markets.

Does crypto lending affect your credit score?

One of the exciting possibilities in getting a crypto-backed loan is that most of the decentralized platforms would not usually carry out credit checks on borrowers or rely on their credit score to approve a loan since it is decentralized in nature and most times the borrowers are anonymous. 

The requirement is basically their cryptos to be used as collateral in order to facilitate the loan approval. This is a more secure, faster, and cheaper way of borrowing than the traditional financial system which is associated with bureaucratic bottlenecks to validate a loan application.

Therefore, everyone is privileged to access lending opportunities as long as they have the required cryptocurrencies to back the loan application. 

In conclusion, the financial world is transforming and cryptocurrencies are changing the dynamics thereby creating the required financial freedom the world is looking forward to in recent times.

Tags: credit scorecrypto creditcrypto lending
Advertisement Advertisement
Previous Post

Bitcoin is accepted in El Salvador, how are things going?

Next Post

What is DAO?

James Enajite

James Enajite

A passionate lover of crypto and mankind with an active mind to create content to educate everyone within my sphere of influence. An entrepreneur with an open heart to accommodate young aspiring individuals to achieve their best in a global space.

Related Stories

Klever joins Web3 Domain Alliance to advance blockchain naming ecosystem

Klever joins Web3 Domain Alliance to advance blockchain naming ecosystem

by Klever
February 22, 2023
0
7.4k

We are excited to announce that Klever has recently joined the Web3 Domain Alliance, a group dedicated to promoting the...

Klever Wallet: A Secure Solution for Managing Your Crypto Assets

Klever Wallet: A Secure Solution for Managing Your Crypto Assets

by Isabela Bellumat
February 14, 2023
0
7.4k

With so many options available, it can be difficult to determine which wallet is the best choice for your digital...

The Rise of Decentralized Autonomous Organizations: Transforming the Future of Business and Society

The Rise of Decentralized Autonomous Organizations: Transforming the Future of Business and Society

by Warren Manuel
February 10, 2023
0
7.3k

Imagine a world where businesses and organizations operate with complete transparency, security, and autonomy. A world where intermediaries and central...

Revolutionizing Investment: Can AI be Your Next Financial Advisor?

Revolutionizing Investment: Can AI be Your Next Financial Advisor?

by Warren Manuel
February 9, 2023
0
7.3k

Investment and financial management have come a long way in the digital age. With the advent of Artificial Intelligence (AI),...

Next Post
What is DAO?

What is DAO?

What can you do with DGB in the Klever Wallet?

What can you do with DGB in the Klever Wallet?

Please login to join discussion
Download Klever Wallet Download Klever Wallet Download Klever Wallet
ADVERTISEMENT

Recommended

Ethereum

Coin of the Week: Ethereum (ETH)

November 14, 2021
7.5k
Tron (TRX)

Coin of the Week: Tron (TRX)

May 19, 2022
7.5k

Popular Story

  • Stand a chance to win your share of 10,000 KLV

    Stand a chance to win your share of 10,000 KLV

    8357 shares
    Share 3343 Tweet 2089
  • Test drive Klever Wallet, K5 and Win 1000 KLV & 1 KFI

    7030 shares
    Share 2812 Tweet 1758
  • Bitcoin battles back from record losses to $21,000

    5915 shares
    Share 2366 Tweet 1479
  • Klever showcases its blockchain ecosystem on a Time Square billboard

    5359 shares
    Share 2144 Tweet 1340
  • K5 adds new blockchain and KleverSafe support in the latest Android version

    5072 shares
    Share 2029 Tweet 1268

Follow us on Twitter

Klever News

Join the Klever community
Growing together we are stronger.
Be sure to follow us on social media to stay up to date.

Categories

  • Announcements
  • Coin of the Week
  • Education
  • Exchange
  • Games
  • Global
  • Hardware Wallet
  • Market Updates
  • NFTs
  • Opinions
  • Sponsored
  • Wallet
Download Klever Wallet Download Klever Wallet Download Klever Wallet
ADVERTISEMENT

Recent News

Klever joins Web3 Domain Alliance to advance blockchain naming ecosystem

Klever joins Web3 Domain Alliance to advance blockchain naming ecosystem

February 22, 2023
Klever Wallet: A Secure Solution for Managing Your Crypto Assets

Klever Wallet: A Secure Solution for Managing Your Crypto Assets

February 14, 2023
  • Sponsored Content
  • Advertise
  • Contact Us
  • RSS Feed

© 2022 Klever News - Premium Crypto news & insights by Klever Finance.

  • Login
  • Sign Up
No Result
View All Result
  • Home
  • Global
  • Exchange
  • Wallet
  • Education
  • NFTs
  • Announcements
  • Opinions
  • Marketcap

Welcome Back!

Sign In with Google
OR

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Sign Up with Google
OR

Fill the forms below to register

*By registering into our website, you agree to the Terms & Conditions and Privacy Policy.
All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In

Add New Playlist

This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.
-
00:00
00:00

Queue

Update Required Flash plugin
-
00:00
00:00
Go to mobile version