The Royal Bank of Canada files patent for transparent credit scores using blockchain

The Royal Bank of Canada (RBC), filed a patent for a credit score platform using blockchain technology this past fall, according to the patent application from the US Patent and Trademark Office

Ramy Caspi
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On the 15th of March, the US Patent and Trademark Office revealed a patent application from the Royal Bank of Canada, who filed a patent for a credit score platform using blockchain technology.

The patent describes a Blockchain-based credit score platform where “credit records are recorded using blocks linked by identification data. The credit record stores historical and predictive information about borrowers used to compute credit ratings.

The application explains:

“In another aspect there is provided a system for credit and digital identity records with a distributed ledger of a plurality of nodes, each node including at least a computing device, and the distributed ledger having a plurality of blocks, each block comprising identification data linked to a set of identifiers for an individual, transaction data, a timestamp indicating when the block was created, and a hash reference for the distributed ledger.”

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.

According to the patent, the traditional manner of calculating a credit score is “not transparent.” Customers are not always informed when certain data affects their credit score, nor do they “have the tools to take control of their credit score.”

With distributed ledger technology as described in the patent, customers would be “notified when third party credit checks happen or when the credit score changes.” For example, in the case of a missed bill payment that negatively affected their credit score, consumers would be sent a credit alert.

Simply put, every step of the credit rating process is automated by the blockchain system, thus creating a fully-automated, yet transparent system.