Debit and Credit: The Pillars of Credit Scores
Both credit and debit make an essential impact on credit scores, but being starkly different, they affect creditworthiness in diverse ways. In traditional finance, banks and other institutions issue credit cards, and as the primary lending body, specify the loan’s conditions such as interest rate, credit limit, balance repayment, and so on. In turn, the borrower is free to use the loaned amount for various payments or bulk payments like home equity.
Debit cards, on the other hand, are solely secured systems that function as a mode of payment as long as the cardholder (payer) has the required amount of money in their savings account. In these contexts, cryptocurrency and the DeFi space revolutionised financing by combining the ‘best of both worlds’, while also making Fintech blockchain-ready.
Hybrid Bank is poised to become one of the pioneers of groundbreaking financing through combinations and amalgamations that are aimed at providing cryptocurrency users the benefits of traditional financing and more.
Credit
In the DeFi lending ecosystem, credit holds a unique position, primarily because it doesn’t involve centralised financing institutions. In this sense, DeFi extends the scope for lending and borrowing services to all crypto users. However, this inclusive accessibility of crypto-based lending platforms also makes it necessary to have a certain degree of verification and authentication protocol in place, mainly to avoid bad debts. Consequently, there’s a growing need for decentralized credit scores.
Hybrid Bank has developed a credit assessment system that connects with crypto wallets on a global scale, gaining extensive insight on the amount of cryptocurrency held in exchanges. Generated in real-time, this information equips the community with a holistic assessment of the value of digital assets listed on individual exchanges.
Apart from this, primarily as a lending platform, Hybrid Bank has brought into cryptocurrency lending, credit scores, that also offer qualitative insights based on a user’s credit history. Through Hybrid Bank, therefore, the simple act of borrowing and lending credit works as a gateway, creating several benefits and impetuses on the way.
Debit
Traditionally, debit refers to using savings as a means of payment. In the blockchain-based lending scenario, this automatically brings us to the concept of HODLing — the common practice among cryptocurrency owners to hold the money instead of selling it. While this seems like a rational decision, given the unstable nature of cryptocurrency — prices falling and gaining sharply from time to time — companies like Hybrid Bank brought to the forefront the existence of better and more lucrative deals for HODLers.
Hybrid Bank proposed several schemes for HODLers that guarantees liquidity, while also enabling the cryptocurrency-owner to earn from competitive interest rates. Thus, encouraging HODLers by transforming lending into a source of passive income.
Lastly, Hybrid Bank, by solving the issue of exhaustive obsession with savings, also makes sure that lenders can augment and build up on their credit history and credit utilization facets. By allowing users to maintain an extensive credit history and an incentive to maintain low balances and yet gain interest, they facilitate a positive growth of credit scores.
