US credit bureau TransUnion plans to begin providing decentralized protocols with information on borrowers’ credit ratings by the end of this year.
According to The Wall Street Journal, TransUnion will use the ky0x Digital Passport solution from the blockchain security firm Spring Labs. This will allow you to check the rating of borrowers when carrying out lending transactions. The solution also includes various additional checks, including user identification and anti-money laundering checks on transactions.
This way, decentralized lending protocols will be able to access a customer’s credit rating. This will allow you to check the reliability of the borrower, which is especially important when issuing loans without collateral. In addition, clients with a high credit rating will be able to receive lower interest rates.
Steve Chaouki, President of TransUnion for US Markets, emphasized that the emergence of credit ratings in the decentralized finance industry could attract new companies into the industry that had previously refrained from entering DeFi. Credit rating support in the ky0x Digital Passport solution should be available by the end of this year.
In late December, the founder of the Cardano project, Charles Hoskinson, criticized the current state of the DeFi industry. He especially noted the lack of research and testing when launching DeFi projects, which leads to numerous and painful hacks for users.
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