TransUnion, the world’s largest credit bureau, has begun providing credit scores for cryptocurrency lending

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By Degen Lipsa

TransUnion, one of the top credit bureaus in the United States, will provide off-chain credit scores for blockchain-based loan applications while protecting consumers’ privacy.

TransUnion, one of the three major credit bureaus in the United States, announced on Thursday that it will provide credit scores to decentralised financing (DeFi) lenders.
According to the press release, TransUnion will deliver traditional (off-chain) credit ratings to individuals who apply for loans using blockchain-based protocols without jeopardising applicants’ privacy.
To deliver the service, the company is collaborating with data security provider Spring Labs and DeFi identification and compliance software vendor Quadrata.

The devastating crypto bear market of last year resulted in a surge of defaults on unsecured crypto loans. According to Walter Teng, vice president of digital assets at market research firm Fundstrat, the trend underlined the vulnerability of unsecured lending in the digital asset market. Teng also stated that credit scores for crypto borrowers could have reduced losses.

TransUnion’s executive vice president of financial services, Jason Laky, stated in a news release that “credit scoring is an important tool for lenders to help mitigate risk regardless of the platform being used.”

TransUnion’s credit score enables consumers to leverage their credit history and securely communicate their credit information with any blockchain-based lending protocol, while also assisting lenders in improving their decision-making and risk management, according to Laky.
Loan applicants can obtain their TransUnion credit score, which is supplied directly to consumers via Spring Labs and abridged information is then shared with the lender.

“As more consumers and lenders turn to blockchain to conduct business, it’s critical to strike a balance between the information lenders need to assess risk and the privacy and anonymity expected by users of the technology,” said John Sun, CEO of Spring Labs.

TransUnion’s current endeavour is part of a larger trend in which traditional financial (TradFi) services and crypto markets have become more linked as TradFi firms investigate methods to harness blockchain technology and their traditional market presence to benefit crypto investors.
Equifax, a competing credit agency, collaborated with Oasis Labs last year to build identity management and know-your-customer (KYC) compliance for blockchain enterprises. Equifax, another competitor, has been cooperating with decentralised lending platform Credefi for green company score for European Union firms.

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