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In this addition of The eCredit Complete User Experience, we will provide an overview of Risk-based Pricing Score Disclosure notices and Adverse Action letters. Contact CBC for more information regarding either of these products.
RISK-BASED PRICING/SCORE DISCLOSURE NOTICES
The Risk-based Pricing Rule's purpose is to inform consumers that they may have received worse credit terms than other consumers because of information in their credit reports. Your receipt of a consumer’s credit application and subsequent pulling of a credit report for financing triggers the RBP Rule notice requirement. A creditor who uses a consumer report and provides credit to the consumer has to give these customers a “risk-based pricing notice” (RBP Notice). CBC’s RBP Notice solution includes a Credit Score Disclosure Notice exception or CSD. The CSD Notice exception requires a business to provide all applicants for credit a disclosure of their credit score and certain other information.
This notice should be provided to every credit applicant as soon as possible after obtaining the credit report but no later than the consummation of the transaction. If you use multiple credit scores, you must disclose the one on which you most relied on for financing. If you didn’t primarily rely on one, you can disclose any one of the multiple scores (requirements may vary slightly by state). If a consumer does not have a credit score, you must give that consumer an RBP Notice with alternate language stating no score was available.
What if your business doesn’t pull traditional credit reports or credit scores? Your lender may still expect you to handle this requirement as the initial creditor, and this may require you to utilize a credit score anyway. We recommend contacting all of your lenders to make sure you know their requirements.
ADVERSE ACTION LETTER NOTICES
Under the ECOA, any creditor “who in the ordinary course of business regularly participates in a credit decision, including setting the terms of credit,” needs to notify a consumer in writing of adverse action taken on a credit application if it cannot offer financing to the consumer within 30 days after receiving the completed application.
Adverse Action is a decision on an application that is adverse to the interests of the consumer, including a refusal to grant credit in substantially the amount or on substantially the terms requested in a credit application unless the creditor makes a counteroffer and the consumer uses or accepts the credit offered in the counteroffer. Also, the termination of, or unfavorable change to, an existing credit account or an action taken in connection with a credit application or an account that is adverse to the interests of the consumer. Unwinding or re-contracting a spot delivery deal can be an example of this “unfavorable change” type of adverse action.
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Please reach out to CBC Sales for additional information anytime Monday through Friday between 8:00AM and 5:00PM PT. One of our friendly and knowledgeable sales people will be happy to help.
