After the Flood

CreDA
4 min readOct 19, 2022

With climate change accelerating, disaster is on everyone’s doorstep. But how do you rebuild when you don’t have a credit history?

Sea levels are rising. Billions of people will lose their homes and have to move.

Hurricane Ian marks the most recent natural disaster to spread destruction across North America, however it is just one in a long line of catastrophes around the world that are becoming increasingly common as the climate crisis escalates.

As more climate-induced natural disasters hit Western countries, it has brought the consequences of global warming into closer view. We have long been able to ignore some of the glaring effects of anthropogenic climate change because the impact has been mostly concentrated far away in places like the Philippines or Europe.

Environmental racism/classism was a term coined in 1982 that is defined as the “disproportionate proximity and greater exposure of racialized communities to polluting industries and environmentally hazardous activities.” It describes the fact that countries and communities that have contributed the least to manmade climate change, mainly those of lower income or a racial minority group, are the ones facing the consequences.

However, when disasters like Hurricane Ian strike, it brings awareness to the fact that Mother Nature doesn’t discriminate.

According to NBC, individuals who are unable to afford flood insurance are now at risk of becoming homeless. In the US, most private insurance policies do not cover flooding, requiring the purchase of a separate insurance that averages at $995 per year. This cost is not something that many can afford, especially with large rates of inflation making the basic necessities such as food, rent, and utilities, more difficult to maintain.

Like the 143 million people that the UN says are likely to be uprooted by rising seas, drought, searing temperatures and other climate catastrophes over the next 30 years, those reeling from floods in Florida, fires in California or drought in Missouri are at risk of losing their homes and their livelihoods. But the problem is exacerbated by the fact that many of these families don’t have the means to rebuild.

Forest fires are increasing at a rate of 3% per year.

It is estimated that 45 million Americans are credit invisible, meaning that they do not have enough information in financial institutions to provide a credit score. The Federal Trade Commission (FTC) estimates that 1 in 5 Americans have a “potentially material error” in their credit score that negatively impacts their ability to get a loan. And those most affected are disproportionately women and minorities. Without a credit history, they will face huge difficulty taking out loans to repair or relocate. This is an emergency that effects people all around the globe, and equal access to financial resources and support systems for disasters are needed. We are just seeing the beginning right now, and to survive the incoming storms, we need to create a society that provides equal and unbiased access to credit.

Alternative credit and financial resources through blockchain technology could act as a promising start to give the underbanked a chance to recover from these tragedies. The risks that we are seeing today do not know borders, and as such the relief efforts shouldn’t be confined to them either. Decentralized finance (DeFi) can reduce the barriers found in traditional banking, in a way that is non-discriminatory. While this may not be able to address all of the issues relating to the rise of environmental disasters and the higher risk dealt to certain communities, it can act as a way to ensure that low-income groups, or those without credit scores are able to bounce back from climate change events.

CreDA’s Credit4Good programme is designed to support people trapped in the Credit Paradox and for those uninsured families that have lost everything, a little credit can go a long way. With only an internet connection and a mobile wallet, people can build their credit profile in order to borrow the money they need.

When climate-induced natural disasters hit, who will you turn to for help to rebuild?

CreDA’s pilot programme has focused on supporting farmers, but we are open to applying our technology to the urgent needs of people affected by the climate emergency also. To do that, we need partners, such as lenders who can work with us to build a custom risk model and partners on the ground to quickly onboard people to set up their wallets and start building credit.

It is no longer possible to ignore the effects of the climate emergency as though it is something that only happens somewhere else. While the world works to reduce our impact on the climate, people are still losing their livelihoods. CreDA wants to help provide equitable access to credit for those that have lost their homes but that haven’t lost their hope to rebuild.

CreDA’s Credit4Good programme uses the principles of DeFi such as transparency, immutability to provide access to credit for people without credit histories or accurate financial data. It’s part of the company’s mission to fulfill the original promise of DeFi, shape the world’s most powerful and equitable credit ecosystem and give ‘credit where credit is due’ to nearly 4 billion people who have been victims of the Credit Paradox.

If you’re interested to partner, please reach out.

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CreDA

CreDA is the world’s first decentralized credit rating service based on users’ on-chain data