Does Crypto Lending Affect Your Credit Score?

A visual representation of digital currency sinking in water. Dan Kitwood/Getty Images

Although very popular and quickly becoming mainstream, cryptocurrency is something that still seems to confuse many people. Throw in a new financial system made up of FinTech companies that provide crypto loans and other crypto-related services. Then things start getting even more confusing, which is why all efforts to unravel this new technology are essential so everyone can make the best use of it.

One of the first questions that come to mind when someone hears or reads the term crypto loan for the first time (other than wondering what it even means) is, will it affect my credit score? This post will explore how credit scores work, how crypto lending works, and whether or not it can impact your credit score. So, read on to learn more.

An Overview of Credit Scores

A credit score is a score or number determined by a proprietary mathematical algorithm that helps lenders predict the individual propensity to pay back loans. It is calculated by a process developed by the three major credit bureaus in the United States–Equifax, Experian, and TransUnion. These agencies use the information in your credit report to establish a score that reflects your credit risk. In other words, it’s a number that tells lenders how probable it will be for you to pay back a loan.