Understanding your credit health
Your credit health is a safety meter for your Loans. It broadly reflects how much you borrowed versus the value of your collateral securing your loans. If it gets too low, you need to take immediate action or a liquidation may happen (see below).
| No score | Inactive. You don’t own anything, so there’s no score to display. |
|---|---|
| 1.2 and above | Healthy. Your collateral covers what you owe. |
| 1.05 to 1.2 | Moderate. Your available credit is running low. It’s recommended you deposit more collateral or repay. |
| 1.05 or below |
Critical. Collateral withdrawals are disabled and you have no available credit. Part of your collateral may be sold automatically to repay what you owe and restore your credit score. Check What is a liquidation? for more information. |
How to check your credit health
- Open the Instant Credit section.
- Tap the Payments tab.
- Right below your balance, you will see your credit health score. This score tells you how "safe" your account is from market changes.
- Tap the "?" icon next to the score. This opens a guide that explains how your score is calculated and what it means for you.
What is a liquidation?
Liquidation is an automatic safety measure. If your credit health score drops too low, the system will sell a portion of your crypto to pay back your debt and protect the lenders.
If you are unable to add more crypto as collateral or pay back part of your loan, and your credit health score hits 1.0, the system will automatically begin a process called Liquidation.
Here is exactly what happens, step-by-step:
- The system will start selling small portions of the crypto you provided as collateral. This is handled automatically by the platform to protect the lenders.
- The money from these sales is used immediately to pay off your borrowed funds at current market rates.
- The system will keep selling and paying down your debt until your health score rises back above 1.25 and is considered "safe" again.
After a liquidation, you will have less crypto in your Instant credit collateral balance than you did before, but parts of your payments will be done for you.
How to prevent a sale (liquidation)
The system will send you alerts through email and push notifications whenever your score shifts significantly. Specifically, you’ll be notified if it drops under 1.2 (indicating low credit) or falls beneath 1.05 (signaling your collateral is at risk). You can boost your health score and prevent a liquidation by choosing one of these paths:
- Option 1: Add more crypto as collateral. By adding more collateral, you increase your safety.
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Option 2: Pay back part of your loan. Reducing your debt immediately raises your credit health.