CIPP/US Study Guide
Chapter 9: Financial Privacy

Risk-Based Pricing and Credit Score Disclosures

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Under the Risk-Based Pricing Rule, lenders must notify consumers who receive less favorable terms because of their credit report. Anyone using credit scores to make or arrange residential real-property loans must disclose the scores and related information to applicants.

Risk-based pricing means tailoring rates or terms to a borrower's creditworthiness. The Risk-Based Pricing Rule requires notice to customers who get less favorable terms because of their report. The rule is jointly prescribed by the CFPB and the Federal Reserve Board.

Residential real-property loans

All persons who use credit scores in making or arranging loans secured by residential real property must provide credit scores and related information to applicants.

Key terms - quick answers

What is “Risk-based pricing”?
Offering different interest rates or loan terms to borrowers based on their creditworthiness.
What is “Risk-Based Pricing Rule”?
FCRA rule requiring those offering credit to notify customers receiving less favorable terms because of their credit report.

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