In 2015, the US Congress declared credit scoring to be a monopoly controlled by just
one organization, FICO. FICO provides credit scoring for more than 90% of top
US lenders. FICO’s credit scoring system leaves over 26 million Americans “credit
invisible” and an additional 19 million unscorable.
Globally, the situation is even worse. 38% of the world’s population does not have
a bank account. 3 billion people are unable to obtain a credit card and 91%
of residents in developing nations experience difficulty receiving debt financing from
traditional financial institutions. Traditional credit bureaus require borrowers to take
on debt before obtaining a credit score, leaving millions of potentially creditworthy
individuals unscorable by the current credit system.
Credit scoring is similarly siloed around the world, further exacerbating these issues.
Credit scoring providers can not operate globally, meaning that when a borrower
moves to a new country, they must rebuild their credit scores from scratch as their
score does not follow them. Since identity verification is also centralized, applying for
a loan requires users to expose all of their personal information, putting individuals
at increased risk of experiencing identity theft. Credit losses due to identity theft
exceed $21 billion each year.
In this whitepaper, we introduce a global, decentralized credit protocol, Bloom.
Bloom addresses these existing limitations in lending by moving credit scoring and
risk assessment to the blockchain.
Bloom is a standardized, programmable ecosystem to facilitate on-demand, secure,
and global access to credit services. Bloom presents a novel approach to credit risk
assessment allowing both traditional fiat lenders and digital asset lenders to issue
compliant loans on the blockchain while increasing competition to lower fees and
improve borrower experience at every layer of the credit issuance process.
The Bloom protocol presents solutions to the following problems:
1. Cross-Border Credit Scoring: Credit histories are not portable across countries,
forcing individuals to re-establish their credit track records from scratch
when they relocate.
2. Backward-Looking Creditworthiness Assessment: Credit systems rely on
historical debt repayment information and therefore cannot easily accommodate
users who are new to credit. This is especially prevalent among minorities, the
underbanked, and the youth.
3. Lenders Have Limited Ability to Expand and Offer Loans Globally:
Borrowers in markets with less developed financial and regulatory infrastructure
struggle to access credit as lenders have limited identity and scoring data to base
4. High Risk of Identity Theft: Borrowers must expose all of their personal
information when applying for a loan – the same info an attacker can use to
open new lines of credit.
5. Uncompetitive Credit Scoring Ecosystem: Credit data is centralized. In
most markets, a single provider scores credit, resulting in an uncompetitive
ecosystem for evaluating credit risk. FICO was checked on 90% of all U.S.
There are three main systems which comprise the Bloom protocol:
1. BloomID (Identity Attestation): BloomID creates a global secure identity,
allowing lenders to offer compliant loans globally, without forcing borrowers to
expose personal information.
2. BloomIQ (Credit Registry): BloomIQ is a system for reporting and tracking
current and historical debt obligations that are tied to a user’s BloomID.
3. BloomScore (Credit Scoring): The BloomScore is a metric of consumers’
creditworthiness. This decentralized score is similar to FICO or VantageScore
score, but with updated models.
The Bloom protocol improves the current credit ecosystem by creating a globally
portable and inclusive credit profile, reducing the need for traditional banking infrastructure
and opaque, proprietary credit scores. This means both traditional fiat
lenders and digital asset lenders will be able to also securely serve the 3 billion people
who currently cannot obtain a bank account or credit score.
Bloom decentralizes the credit industry while lowering rates and increasing security.
Bloom makes it easy for lenders to transition to the blockchain by offering a new,
compliant way for them to access new markets.