TransUnion, one the three largest credit agencies in the U.S. will begin delivering credit scores to decentralized finance ( DeFi ) lenders next week, announced the company on Thursday.

TransUnion, according to a press release, will provide individuals with traditional (off-chain), credit scores when they apply for a loan using blockchain-based protocols. This won’t compromise the privacy of applicants.

Quadrata, a DeFi Identity and Compliance Software developer and Spring Labs, a data security company, will provide this service in collaboration with the firm.

Quadrata confirmed that the service will be available starting next week.

The brutal crypto market crash last year led to a tsunami of defaults for unsecured crypto loans. Walter Teng said that the trend showed the fragility in digital asset lending. Teng said that the credit scores of crypto borrowers may have been able to mitigate losses.

Jason Laky is the executive vice president for financial services at TransUnion. In a recent press release he stated that “credit scores are an important tool to lenders in order to mitigate risk, regardless of platform used.”

TransUnion’s credit score allows consumers to share their credit information and credit history in a safe way with any blockchain lending protocol, while also improving lenders’ decision-making.

TransUnion can provide a credit score to loan applicants. The information is delivered directly to the consumer via Spring Labs, with an excerpt of that data being shared with lenders.

John Sun, Spring Labs’ chief executive officer, stated that as more consumers and lenders use blockchain technology to conduct business, there is a need to strike a balance between the information lenders require to assess risks and the privacy and anonymously that users expect.

TransUnion’s new effort is part a larger trend where traditional financial services (TradFi), and the crypto market have become more entwined, as TradFi firms are exploring ways to use Blockchain technology and their foothold on traditional markets to service crypto investors.

In the past year, Equifax, a rival credit agency, has collaborated with Oasis labs to develop compliance with KYC for blockchain companies. Equifax has also collaborated with the decentralized lending platform Credefi to score green companies for firms in Europe.

TransUnion and Spring Labs introduced in October a data-sharing, privacy-focused service called TrueZero. The service allows financial institutes to send data such as credit information without disclosing sensitive personal data. TransUnion is a Spring Labs investor.

UPDATE (20 April 2023, 15:25 UTC). Added details from Quadrata spokesperson regarding service availability starting next week.

James Rubin is the editor.