If the loan assessment criteria are objective, they can be quantified.

The basic concept here is: ZKP lets you prove arbitrary statements.

Instead of:

  Here is entire bank history, you decide.

You can say:

  Had a fixed income above $X for 12 months.
  Had a surplus of $X after fixed expenses in the last 3 months.
  Did not buy anything irregular above $1000 in the last 3 months.

"Did not gamble" is a moral judgement. Who knows, maybe I'm buying gum at the local casino, is that gambling? Maybe I'm tossing a coin every night after work as to whether I should drive in the opposite lane, is that not gambling? You can only objectively measure financially risky behavior in statistical terms.

Think of a ZK proof as a program that can take both public and private knowledge as input, and produce public and private knowledge as output.

This is what seems magical to me: A program with secret input. You can't run the program to verify that my execution of the program is correct, but you can verify a proof that I ran the program with input you didn't have.

The way private knowledge works is through cryptographic commitments.

For example, the bank may start by giving you a signed, structured document with your transactions.

You can then feed their signature and the document to your program, and produce any derivation.