TransUnion Plans Blockchain Based Credit Scoring
TransUnion has joined forces with Spring Labs and Quadrata. TransUnion is a public company that trades on the New York Stock Exchange under the stock code TRU. The goal of this agreement is to add off-chain credit rating to decentralized finance (DeFi) and Web3 apps, which are web services built on public blockchains. This is the first time a service like this has been given to these kinds of apps. This should make it easier for lenders to make better, more informed decisions about credit requests made using blockchain technology.
With the newly launched TransUnion service, DApps (DeFi Applications) will be able to access off-chain credit info using technology from Spring Labs and Quadrata, a digital passport network that was once part of Spring Labs but is now independent. The credit information will be provided upon the consumer’s request. The secret method created by Spring Labs is meant to make it possible to send credit score information using blockchain technology while keeping the user’s personal information private. Through Spring Labs technology, TransUnion will send the consumer’s credit score to the consumer. The consumer will then share a part of the score with the DApp.
Jason Laky, the Executive Vice President of Financial Services at TransUnion, said that, no matter what platform is used, credit scoring is a key tool for lenders to lower risk. The partnership between Spring Labs and Quadrata will give DeFi lenders the information they need to make smart lending decisions. This will reduce their risk and make it more likely that borrowers will get better loan terms.
The teamwork is happening at a crucial time when lenders are trying to set up a more inclusive lending environment, which often means making consumer loan options for people who weren’t able to get them before. Before blockchain technology came along, DeFi lenders couldn’t get credit-related information because they were worried about privacy. When TransUnion’s credit score data, which could be used to give credit scores to almost all adult U.S. citizens, is combined with Quadrata’s digital ID, a group of people who hadn’t been able to get loans before will be able to do so.
John Sun, the CEO of Spring Labs, says that it is important to find a balance between the information that lenders need to assess possible risks and the privacy and anonymity that blockchain technology users want. This is because more and more consumers and lenders are using blockchain technology to do business. TransUnion’s identity and credit data are now part of this new product, which is a big step toward achieving balance and making blockchain-based loans more likely with less risk.
Lisa Fridman, the President of Quadrata, says that having credit information on the blockchain is a key part of the web3 network that lets customers get more capital-efficient solutions. Integrating blockchain technology into important banking apps is a key step for its future use.