The rule, adopted by the Federal Reserve Board and Federal Trade Commission, requires lenders that extend credit based on a person’s credit report to provide risk-based pricing notices if credit terms are “materially less favorable” than terms that would be offered to “a substantial proportion” of consumers.
Generally, disclosures are required if an interest rate is higher based on the person’s credit score.
The final rule provides a choice of three methods a lender can use to determine if terms are materially less favorable. It also provides a special test for credit card offers: If an individual receives a rate that is higher than the lowest one advertised on a multiple-rate offer, the notice is required. Notice must be given after the terms are set but before the consumer is contractually obligated on a transaction.
The rule implements provisions of the Fair and Accurate Credit Transactions Act. CIC Credit will offer the disclosures to all clients starting Jan 1st 2011. In addition to the disclosure that can be amended to the credit report CIC also offers a fulfillment services to keep you in compliance with this new regulation. Please call your local CIC representative or call 800-352-5882, you may also email sales@ciccredit.com for more information on complying with the new Risk Based pricing ruling by the FTC.
