The Federal Trade Commission and the Federal Reserve are reviewing proposed amendments to the Risk-Based Pricing Rule requiring creditors, as of July 21, 2011, to disclose credit score information to consumers when a score is used in setting or adjusting credit terms.
The FTC is seeking public comment on the amendments.
Since January 1, the rule has required creditors to send consumers a “risk-based pricing” notice when, based on the consumer’s credit report, the creditor provides the consumer with less favorable credit terms than it provides to other consumers.
Consumers who receive the notice can obtain a free credit report to check the report’s accuracy. As an alternative to providing the notice, the rule permits creditors to provide credit applicants with a free credit score and information about their score.
The proposed amendments to the rule would reflect new requirements added by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. The proposed amendments would add content to risk-based pricing notices, provide new model notices and specify certain technical requirements regarding credit score disclosures.
Risk-based pricing refers to the practice of setting or adjusting the price and other terms of credit provided to a particular consumer based on the consumer’s creditworthiness.
