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Colendi: Decentralized Credit Scoring and Lending

Micro-lending solutions on the blockchain


It has become more and more common for blockchain-based startups to take aim at existing markets that have become stagnant, or have fallen behind the times. One such example of this is the lending industry. Currently, fewer than a third of people who apply for a loan, actually get one. Credit scoring was invented as a system for a world with few streams of revenue, and few financial burdens. But, we now live in the modern era, and globalization means that we spread ourselves further and wider than ever before.

The Reasons

Colendi, a Turkish startup owned by ininal founder Bulent Tekmen, has identified two clear reasons for issues. Firstly, a huge amount of lending needs are in small amounts, known as micro-credits. Banks rarely cover these requests at all. Secondly, the credit scoring method itself is outdated, as it is tied only to bank details and financial outgoings.

The Solution

So, Colendi are proposing a blockchain-based credit scoring, credibility and micro-credit system. The proposal is simple to understand. Colendi will use a scoring algorithm, known as the Colendi score, to rate prospective creditors in terms of their credibility. This will be a much wider search than current methods. Users will be evaluated based on social media data, smartphone analysis and a wide range of factors. Furthermore, they will use the concept of Payday loan companies; customer loyalty and track record. This means that if you borrow once, your score goes up. This is also how it works with credit cards in most developed countries.

ID verification will be quicker and more reliable too, as this is the main jewel in the crown of blockchain tech. And the “Colendi Card” will be a debit loan card which can be used for spending and repayments, giving users more flexibility.

Obviously, the key thing here is microcredits. With Colendi, users will be able to borrow small amounts that banks wouldn’t consider. And, while these are yet to be confirmed, the interest rates are likely to be much lower than Payday loan companies. These companies, despite receiving huge amounts of negative publicity for irresponsible lending and huge interest rates, are still extremely popular. This alone proves that there is a market for Colendi to fill.

You can have a look at the Colendi White Paper via this link. In the meantime, stay tuned for coverage of the upcoming ICO, right here on bitrazzi!