So for those of you who doesn't know. If you do the following you can get a low credit score

• Not have credit history or not have it for a long time (like in my case I don't have a credit score since I never took out a loan or use a credit card. But at one point when I was getting my first degree magically my credit score was something like 700 points to encourage younger people to take loans. A practice I think that should be illegal since right now if I go for gov jobs or many other things I have to explain why I don't have any credit score since some places won't hire you if you have a low credit score (USA))
• Obviously having late or missed payments
• Paying off a loan early
• Checking your credit score. This is include if you were going to something like a car dealership or a bunch of them and they check your score.
• And a number of other things

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What happens when you have a bad credit score or none

• Getting a loan approved can be impossible or hard
• Higher Rates and More Restrictive Terms on Approved Loans
• Trouble Renting an Apartment or Buying a House
• Trouble Getting a Job or Security Clearance
• Trouble Getting a Cellphone Contract
• Higher Insurance Premiums
• Tougher time with utilities, including the internet

NOTE: DeFi obviously doesn't fix some of this in itself. But the more people turn to it and the more political people see there is better solutions. The more likely we will see credit scores realistically being used for things like renting an apartment or getting jobs will start to go away.

A big thing to note is banks are looking at the DeFi model and looking at using it. Right now they have their people studying it so it's up in the air if they will look at making their own DeFi or if they will have an internal use of it somehow. But the trustless system of it makes it where credit scores are pointless.

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And note I don't think DeFi will 100% replace the current loan system because with DeFi you must have collateral.

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And note we are more like v1 of DeFi, I can easily see in the future that we will have smart contracts in the future which can allow the loan holder to request different rates or other things based on pure math.

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DeFi and Credit Cards

Now as far as the future of DeFi on where I see things going sooner than later. Even more if you already have a platform with a payment card like if you were a bank. DeFi could easily be used for credit cards if it is setup right. Basically how it would work is

• The company would setup a smart contract where similar to a normal DeFi smart contract, but without the borrower getting coins or whatever.
• The credit card user would put collateral up like they would with a normal DeFi system. And like a normal DeFi project you would want to overcollateralized for whatever you're borrowing.
• The borrower would use a credit card just like they do now, but the user will have to pay with some approved coin to pay off the loan. This doesn't end the contract, it simply keeps the collateral from being liquidated. And a long as the interest + borrowed amount doesn't go above the limit, the credit card is still active and the collateral is safe.

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DeFi + NFT

So as Web 3.0 gets made and stuff like housing deed or other things goes fully on the blockchain as a NFT. If there was a way a DeFi system could monitor and see how much something is worth. Technically that thing could be used as collateral. So like if you have a $100k house, you can borrow up to $80k without a problem on some DeFi platforms. If you borrow or the interest goes above the limit, then the house deed is liquidated and sold off to someone else most likely at a slight discount of the value.

This in itself opens the doors to many many things.

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There is a few other things that can happen with future versions of DeFi. But because crypto highly forces the average person to take extreme responsibility of yourself, and because the system is trustless. This means things like your credit score won't matter.

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What other changes do you see happening with DeFi in the future?