DODD FRANK RISK BASED PRICING RULE FINALIZED
The Federal Trade Commission and the Federal Reserve Board have finalized changes to the proposed Risk Based Pricing Rule. The Final Rule requires creditors to provide consumers with their credit score when the consumer’s credit score is used to determine credit terms.
What is risk based pricing? Risk based pricing is “the practice of setting or adjusting the price and other terms of credit provided to a particular consumer based on the consumer’s creditworthiness.” Creditors have been required under federal law to give consumers a “risk-based pricing” notice when the creditor grants credit to the consumer on less-favorable terms than it provides to other consumers based on a credit score.
Consumers have a right to obtain a free credit report and review their credit report for inaccuracies. Creditors may also comply by providing consumers with a free credit score and information about their credit score.
The amendments to the Rule reflect the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, which requires creditors to disclose a credit score in risk-based pricing notices, if one was used in making the credit decision, along with certain other additional information. The Dodd-Frank requirements go into effect on July 21, 2011.
The amendments to the Rule add content to risk-based pricing notices, provide new model notices, and specify certain technical requirements regarding credit score disclosures. In addition, the final Rule includes language that clarifies the circumstances under which a creditor using a proprietary credit score – a credit score developed for that creditor’s own use – must disclose that score to the consumer.
Have you recently applied for credit and received less favorable credit terms (i.e., high interest rate)? Did you receive your credit score from the creditor? Did you receive notice of your right to obtain your free credit report?
The amendments to the Rule reflect the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, which requires creditors to disclose a credit score in risk-based pricing notices, if one was used in making the credit decision, along with certain other additional information. The Dodd-Frank requirements go into effect on July 21, 2011.
The amendments to the Rule add content to risk-based pricing notices, provide new model notices, and specify certain technical requirements regarding credit score disclosures. In addition, the final Rule includes language that clarifies the circumstances under which a creditor using a proprietary credit score – a credit score developed for that creditor’s own use – must disclose that score to the consumer.
CONTACT CREDIT REPORT ATTORNEY MICAH ADKINS.
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