Credit scores might be getting an update if the Royal Bank of Canada (RBC) has anything to do with it.
Released yesterday, an RBC patent application describes "a system for credit and digital identity records" that would incorporate a "distributed ledger" that has "a plurality of nodes" and blocks "comprising identification data linked to a set of identifiers."
The application is the first step toward a futuristic system that could draw upon more historical data than current systems do, improving rating accuracy while creating an immutable record.
Although the patent application neglects to mention specifics about the platform – whether public or private, existing or hypothetical – it does note one of the main problems people have with their credit scores stating:
"Traditional credit score processes are not transparent. A person's credit score may be negatively impacted by credit data without the borrower's knowledge. The data source may not be reliable and the person may not understand what credit data and data source impacted their credit score. People do not understand how their score is generated and do not have the tools to take control of their credit score ... There is also no transparency around how the credit score is calculated."
The abstract and opaque systems currently employed today are juxtaposed by what RBC believes could be a game-changing use case of blockchain technology. "In some embodiments," notes the application, "the credit history application is configured to generate a notification or alert relating to the credit event to provide the individual organization with notification that a credit event has been received by the system. This can provide transparency."
RBC's patent application is continued acknowledgment from the bank that sweeping digital economic transformations will revolve around distributed ledger technologies. RBC has previously called for closer monitoring of cryptocurrency transactions, and has also helped J.P. Morgan to test its Quorum blockchain platform.