diff --git a/lib/util/schema-utils.spec.ts b/lib/util/schema-utils.spec.ts
index 1a9528d07c8448..45ef6761229fe0 100644
--- a/lib/util/schema-utils.spec.ts
+++ b/lib/util/schema-utils.spec.ts
@@ -51,10 +51,13 @@ describe('util/schema-utils', () => {
 
     it('supports key schema', () => {
       const s = LooseRecord(
-        z.string().refine((x) => x === 'bar'),
-        z.string()
+        z
+          .string()
+          .refine((x) => x === 'bar')
+          .transform((x) => x.toUpperCase()),
+        z.string().transform((x) => x.toUpperCase())
       );
-      expect(s.parse({ foo: 'foo', bar: 'bar' })).toEqual({ bar: 'bar' });
+      expect(s.parse({ foo: 'foo', bar: 'bar' })).toEqual({ BAR: 'BAR' });
     });
 
     it('reports key schema errors', () => {
diff --git a/lib/util/schema-utils.ts b/lib/util/schema-utils.ts
index bc0b9e0cf1855d..f7d7c0985104ee 100644
--- a/lib/util/schema-utils.ts
+++ b/lib/util/schema-utils.ts
@@ -146,11 +146,11 @@ export function LooseRecord<
     // Avoid error-related computations inside the loop
     return z.record(z.any()).transform((input) => {
       const output: Record<string, z.infer<ValueSchema>> = {};
-      for (const [key, val] of Object.entries(input)) {
-        const parsedKey = Key.safeParse(key);
-        const parsedValue = Value.safeParse(val);
+      for (const [inputKey, inputVal] of Object.entries(input)) {
+        const parsedKey = Key.safeParse(inputKey);
+        const parsedValue = Value.safeParse(inputVal);
         if (parsedKey.success && parsedValue.success) {
-          output[key] = parsedValue.data;
+          output[parsedKey.data] = parsedValue.data;
         }
       }
       return output;
@@ -161,26 +161,26 @@ export function LooseRecord<
     const output: Record<string, z.infer<ValueSchema>> = {};
     const issues: z.ZodIssue[] = [];
 
-    for (const [key, val] of Object.entries(input)) {
-      const parsedKey = Key.safeParse(key);
+    for (const [inputKey, inputVal] of Object.entries(input)) {
+      const parsedKey = Key.safeParse(inputKey);
       if (!parsedKey.success) {
         for (const issue of parsedKey.error.issues) {
-          issue.path.unshift(key);
+          issue.path.unshift(inputKey);
           issues.push(issue);
         }
         continue;
       }
 
-      const parsedValue = Value.safeParse(val);
+      const parsedValue = Value.safeParse(inputVal);
       if (!parsedValue.success) {
         for (const issue of parsedValue.error.issues) {
-          issue.path.unshift(key);
+          issue.path.unshift(inputKey);
           issues.push(issue);
         }
         continue;
       }
 
-      output[key] = parsedValue.data;
+      output[parsedKey.data] = parsedValue.data;
       continue;
     }