Over the last 9 months, we learned a tremendous amount about how people use Credo360. This includes what methods people use to verify their identity, how they use endorsements, how their Credo Score changes with interactions they have on Credo etc. etc. And while we thought our initial Credo Score algorithm was pretty good, we definitely saw some shortcomings and opportunities for improvement.

So, today we are launching a new and improved Credo Score, originally named Credo Score 2.0. First, a brief list of things that have changed:

You can no longer rate your Facebook friends or people in your Circle of Trust. Now, you can rate only people with whom you’ve had transactions totaling at least $10.

Rating options “poor”, “fair”, “good” and “excellent” have been replaced with “Positive”, “Negative”, and “Terrible” (more on this below).

Reviews from people in your Circle of Trust are now called Endorsements and are separated from other reviews.

You will no longer be able to connect “weak” verifications to Credo. For example, to connect Facebook to your Credo account, you’ll need to have at least 12 friends on Facebook.

These are the changes that users will be able to see. However, we’ve actually completely re-built the Credo Score algorithm. The goal was to make it work as closely to how reputation works in the real world as possible. In the real world reputation has the following important properties:

It is difficult to build. It takes months, sometimes years, for people to acquire good reputation. It is is easy to lose. Just a few dishonest actions can negate years of positive reputation.

This is exactly how Credo Score works now as well. When you sign up, and if you are willing to provide sufficient identity verification, you start out at the low end of “good” reputation, as you get the benefit of the doubt. Then, you can work your way up by getting endorsements from people and building up your transaction history. But it will take time before you can get to “excellent” reputation. Depending on how active you are, it could take anywhere from a few months to over a year. At the same time, getting just a handful of terrible ratings can bring your reputation down significantly — it can drop from “excellent” to “good” or even “fair” in a span of a single week.

This brings us to the new rating system. We used to have 4 rating options: “poor”, “fair”, “good”, and “excellent”. Over time, we discovered a couple of issues with this system:

People used “excellent” ratings way too much. In fact, one of the surprising things was that “good” rating was the one least frequently used. The ratings were more or less equal to each other. For example, an “excellent” rating would cancel out a “poor” rating, and a “fair” rating would cancel out a “good” rating.

These two things combined meant that once you got enough excellent ratings, you could “afford” to get quite a few “poor” ratings without any noticeable impact to your reputation. Needless to say, that this was not ideal.

The new system is different. We now have only 3 options: “Positive”, “Negative”, and “Terrible”. While a “Positive” and a “Negative” ratings are still roughly equal to each other, a “Terrible” rating has much more weight. In fact, as mentioned above, getting just 3–4 “Terrible” ratings could set your reputation back by months. Terrible ratings also have a compounding effect. Meaning, the negative impact of the 3rd terrible rating is much higher than of the first two, and the 4th terrible rating is more impactful than the 3rd one and so on.

Because of their great impact, “Terrible” ratings are no longer confidential. When you give a “Positive” or a “Negative” rating to someone, the other person doesn’t really know what rating you’ve given them. However, with “Terrible” ratings, they will know. This means, that you probably don’t want to rate an interaction with someone as “Terrible” unless your experience with them was truly terrible and you couldn’t come to a mutually agreeable resolution.

There are a few other improvements that we’ve built into the Credo Score algorithm to make it both accurate and reliable. And in fact, explanation of how Credo Score works is one of the more frequent questions we get. This, however, deserves its own full blogpost — so, stay tuned!