Decentralized credit scoring

Credit scoring, an important prerequisite for financial institutions to lend to individuals, normally requires the disclosure of a great deal of personal information. Once disclosed, the information is costly to process and store by receiving organizations and is in danger of leakage to malicious actors.

Midnight addresses this challenge using zero-knowledge (ZK) technology, which allows for the verification of an assertion without revealing any additional information. ZK enables one party to prove that a statement is true while keeping all other details private. For example, a borrower can prove their eligibility for a loan without disclosing sensitive financial details.

This capability is particularly valuable in decentralized credit scoring, where ZK can assign a credit score to a digital ID without the owner of the identity revealing any other personally identifiable information. This ensures that the process remains secure, private, and efficient while minimizing risks associated with data leakage or unauthorized access.