Credit Status

Overview

In Qaay, Credit Status and Credit Score represent the real-time health and risk level of a user’s borrowing position. The system continuously assesses the relationship between debt and collateral, presenting both numerical and qualitative indicators for clarity.

Credit Score: A real-time numerical value representing the health of a user’s borrowing position. A higher Credit Score indicates a safer and healthier position, while a lower Credit Score reflects increased risk.

• Credit Status: A qualitative interpretation of the Credit Score that categorizes loan health into zones such as Excellent, Healthy, Warning, and Critical.

• Outstanding Loan: The total active debt of the user.

• Credit Line: The total value of assets allocated as collateral.

• LTV Ratio: The actual Credit Limit generated by a specific asset, calculated as: Asset Market Value × LTV Percent.

• Liquidation Threshold: The threshold at which the user’s position becomes critical, and liquidation may be triggered.

• Savings Value: Assets held outside the Credit Line that may be used for risk management.

• Qaay Oracle: The system component responsible for providing real-time market data for asset valuation.

How Credit Status Works

Qaay dynamically manages loan health by continuously analyzing debt and collateral. The system uses real-time market data to calculate Credit Score and determine Credit Status, enabling users to monitor their financial position and risk level at any time.

Maintaining a Healthy Credit Status

To maintain a healthy borrowing position, users should keep their Credit Score in a strong range by ensuring sufficient collateral in the Credit Line and managing Outstanding Loan relative to the total Credit Line Value. A higher Credit Score indicates stronger credit health, while a lower Credit Score indicates increased risk.

Protective Actions

When the system detects increased risk, it automatically initiates protective actions. It first transfers part of the user’s Savings Value to the Credit Line. If this is not enough, automated liquidation is triggered to reduce risk and stabilize the position.

Credit Status Levels

• Excellent Zone
  The user’s Credit Score is close to 100, indicating a very strong and secure borrowing position. In this zone, the Outstanding Loan is well covered by the user’s Credit Line Value, and the account is considered in good health.

• Healthy Zone
  The user’s Credit Score remains within a healthy range, indicating a stable borrowing position with manageable risk. Users should continue monitoring their Credit Line Value and Outstanding Loan.

• Warning Zone
  The user’s Credit Score has declined into the warning range. The position is still manageable, but it is more sensitive to market changes and may require preventive action, such as adding assets to the Credit Line or repaying part of the Outstanding Loan.

• Critical Zone
  The user’s Credit Score has dropped into a critical zone. The position may trigger QAAY’s protective mechanisms. The system first attempts to rebalance the account by transferring available assets from Savings to the Credit Line. If this is not sufficient, controlled liquidation may be triggered to restore account safety.