The Federal Reserve Board and the Federal Trade Commission jointly issued a proposal Thursday that would require consumers to be notified when they are receiving credit on less favorable terms than other consumers, a practice known as risk-based pricing.
The plan, which is required by the Fair and Accurate Credit Transactions Act, would let creditors offer loans at less favorable terms when a consumer has a low credit score. The agencies said the creditor must give notice before the consumer becomes contractually obligated to the loan.
But the agencies created an exception to let creditors give consumers their credit score instead of the risk-based pricing notice. Once the proposal is published in the Federal Register, which is expected soon, the public can comment for 90 days.
