LoyalCredit Specification

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LoyalCredit

Built on Trust. Proven by Repayment.

LoyalCredit is an open source, relationship-based credit specification for building, evaluating, and managing credit relationships with individuals and businesses. It provides a progressive lending framework that begins with secured credit and can advance qualified borrowers toward unsecured personal or business loans through demonstrated repayment performance.

LoyalCredit is designed around a simple principle: credit access is earned through reliable repayment. Borrowers establish a relationship with a lender through secured lending, build a verifiable repayment history, receive a credit grade based on performance, and can progress through the Credit Trust Ladder as their demonstrated reliability increases.

The specification is designed for lenders, financial platforms, businesses, cooperatives, community lending organizations, internal credit systems, and other organizations that want to establish their own relationship-based lending programs without depending on a centralized credit scoring provider.

Core Principles

Credit is earned through demonstrated repayment behavior.
Trust increases through successful payment performance.
Late payments reduce credit standing.
Consistent repayment can increase borrowing access.
Secured lending provides the initial path for establishing a credit relationship.
An A grade is required for eligibility to progress into unsecured lending.
Default permanently eliminates the borrower from the lending programs of the specific business that recorded the default.
A default does not prevent the borrower from seeking financing from another lender.
Credit decisions should be deterministic, explainable, and auditable.
Individuals and businesses can participate under the same fundamental credit trust model.
Repeat successful borrowing strengthens the lending relationship.
The system should reward reliable borrowers with progressively greater access to capital.
Credit history belongs to the lending relationship and should not be represented as an unquestionable universal measure of a person’s worth or financial character.

Core Modules

Borrower Profile Module

The Borrower Profile Module establishes the identity and lending profile of each individual or business participating in a LoyalCredit system.

Features include:

Individual borrower profiles
Business borrower profiles
Borrower identification
Business identification
Lending relationship identifiers
Account status
Credit program enrollment
Borrowing history
Relationship status
Eligibility status
Association of multiple credit accounts with a borrower
Separation of borrower identity from individual loan records
Support for lender-specific borrower relationships

Credit Account Module

The Credit Account Module manages individual credit relationships between a lender and borrower.

Features include:

Credit account creation
Secured credit accounts
Unsecured credit accounts
Loan amount
Outstanding principal
Interest and applicable charges
Payment schedule
Payment due dates
Account balances
Account status
Account opening and closing dates
Loan term
Repayment history
Account-level credit performance
Current and historical credit grades

Secured Credit Module

The Secured Credit Module provides the initial lending mechanism through which borrowers establish their LoyalCredit relationship.

Features include:

Secured loan creation
Collateral registration
Collateral valuation
Collateral-to-loan relationships
Initial borrowing limits
Secured borrowing requirements
Payment schedules
Principal repayment
Interest repayment
Successful loan completion
Repeat secured lending
Increased secured borrowing capacity based on demonstrated performance
Eligibility evaluation for progression through the Credit Trust Ladder

Secured credit serves as the foundational stage of the LoyalCredit system. A borrower can establish trust without initially qualifying for unsecured credit.

Credit Trust Ladder Module

The Credit Trust Ladder is the central progression system of LoyalCredit.

It measures demonstrated repayment performance and determines how a borrower progresses through increasingly trusted lending relationships.

The ladder can include progressive levels such as:

Initial secured borrower
Established secured borrower
Trusted borrower
A-grade borrower
Unsecured borrower
Preferred borrower

Features include:

Credit progression levels
Grade thresholds
Minimum repayment history requirements
Successful loan completion requirements
Borrowing capacity progression
Secured-to-unsecured progression
Relationship longevity
Repeat borrowing evaluation
Trust accumulation
Trust reduction
Eligibility gates
Advancement rules
Lending restrictions
Lender-defined progression policies

The Credit Trust Ladder must maintain a clear distinction between credit performance and credit eligibility. A numerical score may represent performance, while the ladder determines what lending products the borrower is eligible to access.

Credit Scoring Module

The Credit Scoring Module calculates a borrower score from documented lending behavior.

Features include:

Starting score
Positive repayment points
Late payment deductions
Payment consistency measurement
Completed loan evaluation
Repeat borrowing evaluation
Loan performance weighting
Outstanding obligation evaluation
Score history
Score changes
Score explanations
Deterministic scoring rules
Lender-configurable scoring parameters

Every score change should be traceable to an identifiable lending event.

The scoring system should never silently change a borrower’s score. Each positive or negative adjustment should have a documented reason and timestamp.

Credit Grade Module

The Credit Grade Module converts credit performance into an understandable lending grade.

A default implementation may use:

A: Excellent credit performance and eligible for secured and unsecured lending
B: Strong credit performance with continued progression toward greater lending access
C: Developing credit performance with secured lending eligibility
D: Elevated lending risk with restricted borrowing access
F: Default or qualifying severe credit failure

The A grade is the primary gateway to unsecured lending.

Features include:

Grade calculation
Grade thresholds
Grade history
Grade transition rules
A-grade eligibility requirements
Grade-based borrowing permissions
Grade-based lending limits
Grade explanations
Lender-defined grade policies

Payment Performance Module

The Payment Performance Module records and evaluates borrower payment behavior.

Features include:

Scheduled payment recording
Payment received dates
Payment amounts
On-time payments
Early payments
Partial payments
Late payments
Payment completion
Missed payments
Payment delinquency periods
Payment status history
Payment performance calculations

Payment performance is the primary behavioral input into the LoyalCredit scoring and trust progression system.

Late Payment Module

The Late Payment Module applies defined deductions when borrowers fail to make payments according to the agreed schedule.

Features include:

Late payment detection
Days-late calculation
Configurable late-payment thresholds
Point deductions
Grade impact
Lending eligibility impact
Borrowing expansion suspension
Late-payment history
Transparent penalty calculations

Late payments should reduce trust proportionally according to the severity and duration of the delinquency.

Default and Elimination Module

The Default and Elimination Module defines the terminal state of a lending relationship.

A qualifying default permanently eliminates the borrower from all lending programs operated by the specific business that recorded the default.

Features include:

Default detection
Default qualification rules
Default event recording
Immediate lending suspension
Permanent lender-specific elimination
Elimination from secured lending
Elimination from unsecured lending
Elimination from loan renewal programs
Elimination from Credit Trust Ladder progression
Elimination from future borrowing programs operated by that lender
Immutable default history
Audit records

LoyalCredit does not define a rehabilitation or reinstatement process following default.

The borrower may seek financing from another lender. LoyalCredit’s elimination rule applies to the specific lending business and its lending programs that recorded the default.

Unsecured Credit Module

The Unsecured Credit Module manages lending that does not require collateral and is available only to borrowers who satisfy the applicable progression requirements.

Features include:

A-grade eligibility verification
Unsecured loan applications
Unsecured borrowing limits
Loan approval rules
Payment schedules
Unsecured loan performance tracking
Repeat unsecured borrowing
Unsecured borrowing capacity increases
Continued grade monitoring
Automatic eligibility suspension following qualifying performance deterioration
Default detection

Unsecured lending represents earned access to greater trust and should not be treated as an automatic entitlement based solely on a numerical score.

Borrowing Capacity Module

The Borrowing Capacity Module determines how much capital a borrower can access at each stage of the Credit Trust Ladder.

Features include:

Initial borrowing limits
Secured borrowing limits
Unsecured borrowing limits
Grade-based limits
Repayment-history-based limits
Outstanding balance calculations
Exposure calculations
Aggregate borrower exposure
Repeat-loan capacity
Capacity increases
Capacity restrictions
Lender-defined maximum exposure

Borrowing capacity should be determined independently from the underlying credit score so lenders can establish transparent lending policies.

Loan Renewal Module

The Loan Renewal Module manages repeat borrowing and renewal opportunities for borrowers who remain eligible.

Features include:

Loan renewal evaluation
Previous loan performance analysis
Renewal eligibility
Renewal limits
Renewal terms
Repeat borrowing
Credit Trust Ladder progression
Updated borrowing capacity
Renewal denial following qualifying negative performance
Relationship-based lending incentives

Successful repayment should create opportunities for continued borrowing and stronger lending relationships.

Relationship Management Module

The Relationship Management Module treats credit as an ongoing relationship rather than a series of isolated transactions.

Features include:

Borrower relationship history
Repeat borrowing history
Successful loan history
Relationship duration
Trust progression
Preferred borrower status
Repeat-business incentives
Borrowing opportunities based on historical performance
Relationship-level eligibility
Lender-defined relationship policies

The objective is to create a sustainable lending relationship in which reliable borrowers receive progressively greater opportunities.

Credit Decision Module

The Credit Decision Module combines borrower status, score, grade, ladder position, loan history, payment behavior, and lending policies into an auditable lending decision.

Features include:

Secured loan eligibility
Unsecured loan eligibility
Renewal eligibility
Borrowing capacity determination
Grade verification
Default verification
Eligibility rules
Lending policy evaluation
Approval decisions
Denial decisions
Decision explanations
Decision audit trails

Every decision should identify the rules and borrower information that produced the result.

Audit and Provenance Module

The Audit and Provenance Module records how credit decisions and score changes were produced.

Features include:

Credit event history
Score change history
Grade change history
Lending decisions
Payment records
Default events
Eligibility changes
Rule versions
Timestamps
Account identifiers
Decision provenance
Immutable audit records
Historical reconstruction

The audit system should make it possible to reconstruct the borrower’s credit standing at any point in the lending relationship.

Policy Engine Module

The Policy Engine allows each lending business to define its own lending policies while maintaining the LoyalCredit framework.

Features include:

Score thresholds
Grade thresholds
Payment rules
Late-payment rules
Default rules
Borrowing limits
Secured lending requirements
Unsecured lending requirements
Credit Trust Ladder progression rules
Renewal policies
Exposure limits
Business-specific lending policies
Policy versioning

The policy engine should separate the underlying specification from lender-specific risk policies.

Privacy and Data Governance Module

The Privacy and Data Governance Module governs the collection, storage, access, retention, and disclosure of borrower information.

Features include:

Data minimization
Borrower data access controls
Lender access controls
Credit record permissions
Data retention policies
Audit logging
Sensitive financial information protection
Account-level data isolation
Data export
Data deletion policies where legally permissible
Disclosure controls
Privacy-preserving identifiers

LoyalCredit implementations should comply with applicable financial, privacy, consumer protection, lending, and data protection requirements in the jurisdictions where they operate.

Optional Plugin Modules

Optional plugins extend LoyalCredit without changing the core specification.

External Credit Reporting Plugin

Provides optional integration with external credit reporting systems.

Features may include:

Credit bureau reporting
Credit bureau data retrieval
External credit history comparison
Reporting compliance workflows
Dispute management
External credit record reconciliation

External reporting must remain separate from the internal LoyalCredit score.

Banking Integration Plugin

Connects LoyalCredit to banking and financial account systems.

Features may include:

Account verification
Payment verification
Balance verification
Transaction synchronization
Automated payment detection
Bank account linking

Payment Processing Plugin

Provides payment processing integrations.

Features may include:

Electronic payments
Automated payments
Payment confirmations
Payment reconciliation
Failed payment notifications
Payment processor integration

Identity Verification Plugin

Provides optional borrower identity verification.

Features may include:

Individual identity verification
Business identity verification
Document verification
Identity matching
Verification status
Fraud detection integrations

Business Verification Plugin

Provides additional verification capabilities for business borrowers.

Features may include:

Business registration verification
Business ownership verification
Business status verification
Organizational identity
Business authorization records

Collateral Valuation Plugin

Provides optional external collateral valuation services.

Features may include:

Asset valuation
Property valuation
Vehicle valuation
Equipment valuation
Collateral monitoring
Valuation history

Accounting Integration Plugin

Connects LoyalCredit to accounting and financial management systems.

Features may include:

Loan accounting
Receivables synchronization
Payment reconciliation
Interest calculations
Financial reporting
Account balance synchronization

Risk Analytics Plugin

Provides optional analytical capabilities without replacing the deterministic LoyalCredit scoring system.

Features may include:

Portfolio analytics
Lending trend analysis
Default-rate analysis
Borrower segmentation
Exposure analysis
Performance forecasting
Portfolio monitoring

Analytical models should not silently modify core LoyalCredit scores or eligibility decisions.

Notification Plugin

Provides borrower and lender notifications.

Features may include:

Payment reminders
Payment confirmations
Late-payment notifications
Grade changes
Credit Trust Ladder advancement notifications
Renewal notifications
Eligibility notifications
Default notifications

Reporting Plugin

Provides reporting and visualization capabilities.

Features may include:

Borrower reports
Loan performance reports
Credit grade reports
Trust Ladder reports
Portfolio reports
Repayment reports
Default reports
Lending performance dashboards

API Integration Plugin

Provides standardized integration interfaces for external applications.

Features may include:

Borrower APIs
Loan APIs
Payment APIs
Credit score APIs
Grade APIs
Trust Ladder APIs
Eligibility APIs
Audit APIs
Event notifications

Credit Progression Model

The default LoyalCredit progression model begins with secured lending.

A borrower establishes a lending relationship through a secured loan.

Successful repayment establishes a verifiable performance history.

The borrower’s score and grade are updated according to documented repayment behavior.

The borrower progresses through the Credit Trust Ladder as eligibility requirements are satisfied.

An A grade establishes eligibility to apply for unsecured lending, subject to applicable lending policies and capacity limits.

Continued successful repayment can increase borrowing capacity and strengthen the relationship.

A qualifying default terminates the borrower’s lending relationship with the specific business and permanently removes the borrower from that business’s lending programs.

Credit Trust Philosophy

LoyalCredit is based on the principle that access to capital should expand in response to demonstrated responsibility.

The system therefore creates a progression:

Capital Provided → Repayment Demonstrated → Trust Increased → Credit Access Expanded

Negative behavior produces the opposite progression:

Late Payment → Trust Reduced → Credit Access Restricted

A qualifying default produces:

Default → Lending Relationship Terminated

This creates a clear and predictable relationship between borrower behavior and future lending access.

Individuals and Businesses

LoyalCredit supports both individual and business borrowers.

The same fundamental model can be applied to:

Personal secured loans
Personal unsecured loans
Business secured loans
Business working-capital loans
Business unsecured loans
Equipment financing
Internal employee lending programs
Cooperative lending
Community lending
Private lending programs
Repeat customer credit programs

Business-specific policies can be implemented through the Policy Engine without changing the core Credit Trust Ladder.

Deterministic Decision Requirements

LoyalCredit implementations should produce decisions that can be explained to borrowers and lenders.

A decision should be capable of identifying:

Current credit score
Current grade
Current Credit Trust Ladder position
Payment history
Late payments
Outstanding obligations
Previous successful loans
Current borrowing capacity
Eligibility requirements
Applicable lender policies
Reason for approval
Reason for denial
Reason for restriction
Default status where applicable

Opaque scoring should not be required for core LoyalCredit functionality.

Legal and Regulatory Considerations

LoyalCredit is a technical and financial infrastructure specification. It does not itself constitute legal, financial, lending, underwriting, or regulatory advice.

Implementers are responsible for determining and complying with applicable requirements concerning:

Consumer lending
Business lending
Credit discrimination
Fair lending
Consumer protection
Credit reporting
Privacy
Data protection
Interest rates
Usury
Debt collection
Licensing
Record retention
Financial regulation

The internal LoyalCredit score should not automatically be treated as a consumer credit report or external credit score.

Specification Branding License (SBL)

Standard

Fully AGPL-3.0+ compliant system
Copyleft enforced for network deployments
Required attribution:
- Roxanne Ardary
- https://www.roxanneardary.com/

Optional

Specification Branding License (SBL)
- Attribution-free commercial deployment
- Pricing based on scale, usage, and deployment scope
- https://roxanneardary.com/loyalcredit/

License & Notice Requirements

LoyalCredit is released under the GNU Affero General Public License v3.0 or later (AGPL-3.0+).
By contributing to any Open Arsenal project, you agree that your contributions will also be released under this license.

Please note the following:

All contributions must comply with the AGPL-3.0+ terms.
Under Section 7 of the license, all redistributions, forks, and derivative works must preserve attribution to:
Roxanne Ardary and roxanneardary.com.
LoyalCredit specifications are free to use with attribution. A Specification Branding License can be negotiated upon request.
The project’s notice.md file tracks attribution requirements and contributor acknowledgments. Any update that adds new contributors or modifies attribution should also update notice.md.
When submitting a pull request, ensure that any new files maintain the attribution headers where applicable.
Network-deployed versions of this software must also remain fully AGPL-3.0+ compliant, including exposure of source code modifications when applicable under the license.

For full legal details, please refer to the AGPL-3.0+ license and the project’s notice.md file.

Notice – LoyalCredit

Attribution Requirement: Under Section 7 of the AGPL 3.0+ license, all redistributions, forks, and derivative works, including network-deployed versions of this project, must provide attribution to Roxanne Ardary and roxanneardary.com.

Contributors

This file tracks contributors and their specific contributions to the project.

Roxanne Ardary, roxanneardary.com – August 17, 2026
Created the repository for LoyalCredit. Created the LoyalCredit specification for building relationship-based credit through demonstrated repayment, progressive lending access, the Credit Trust Ladder, and defined eligibility requirements for secured and unsecured lending.
[Add other contributors here] – [Date]
[Describe contribution in one sentence]

License – LoyalCredit

This repository is licensed under the GNU Affero General Public License v3.0 or later (AGPL-3.0+).

Key Points

You are free to use, modify, and distribute the code.
All redistributions, forks, and derivative works or network-deployed versions must also be licensed under AGPL-3.0+ and provide attribution to Roxanne Ardary and roxanneardary.com as required under Section 7 of the license.
The software is provided “as is,” without warranty of any kind.

For the full license text, see GNU AGPL-3.0 License.