(a) Content of the notice.
(1) In general. The risk-based pricing notice required by section 1022.72(a) or (c) must
include:
(i) A statement that a consumer report
(or credit report) includes information about the consumer’s credit
history and the type of information included in that history;
(ii) A statement that the
terms offered, such as the annual percentage rate, have been set based
on information from a consumer report;
(iii) A statement that the terms offered
may be less favorable than the terms offered to consumers with better
credit histories;
(iv) A statement that the consumer is encouraged to verify the accuracy
of the information contained in the consumer report and has the right
to dispute any inaccurate information in the report;
(v) The identity of each consumer reporting
agency that furnished a consumer report used in the credit decision;
(vi) A statement that
Federal law gives the consumer the right to obtain a copy of a consumer
report from the consumer reporting agency or agencies identified in
the notice without charge for 60 days after receipt of the notice;
(vii) A statement
informing the consumer how to obtain a consumer report from the consumer
reporting agency or agencies identified in the notice and providing
contact information (including a toll-free telephone number, where
applicable) specified by the consumer reporting agency or agencies;
(viii) A statement
directing consumers to the Web site of the Bureau to obtain more information
about consumer reports; and
(ix) If a credit score of the consumer
to whom a person grants, extends, or otherwise provides credit is
used in setting the material terms of credit:
(A) A statement
that a credit score is a number that takes into account information
in a consumer report, that the consumer’s credit score was used to
set the terms of credit offered, and that a credit score can change
over time to reflect changes in the consumer’s credit history;
(B) The credit score used
by the person in making the credit decision;
(C) The range of possible credit scores under
the model used to generate the credit score;
(D) All of the key factors that adversely
affected the credit score, which shall not exceed four key factors,
except that if one of the key factors is the number of enquiries made
with respect to the consumer report, the number of key factors shall
not exceed five;
(E) The
date on which the credit score was created; and
(F) The name of the consumer reporting agency
or other person that provided the credit score.
(2) Account review. The risk-based pricing
notice required by section 1022.72(d) must include:
(i) A statement
that a consumer report (or credit report) includes information about
the consumer’s credit history and the type of information included
in that credit history;
(ii) A statement that the person has
conducted a review of the account using information from a consumer
report;
(iii) A
statement that as a result of the review, the annual percentage rate
on the account has been increased based on information from a consumer
report;
(iv) A statement
that the consumer is encouraged to verify the accuracy of the information
contained in the consumer report and has the right to dispute any
inaccurate information in the report;
(v) The identity of each consumer reporting
agency that furnished a consumer report used in the account review;
(vi) A statement that
Federal law gives the consumer the right to obtain a copy of a consumer
report from the consumer reporting agency or agencies identified in
the notice without charge for 60 days after receipt of the notice;
(vii) A statement
informing the consumer how to obtain a consumer report from the consumer
reporting agency or agencies identified in the notice and providing
contact information (including a toll-free telephone number, where
applicable) specified by the consumer reporting agency or agencies;
(viii) A statement
directing consumers to the Web site of the Bureau to obtain more information
about consumer reports; and
(ix) If a credit score of the consumer
whose extension of credit is under review is used in increasing the
annual percentage rate:
(A) A statement that a credit score is a number
that takes into account information in a consumer report, that the
consumer’s credit score was used to set the terms of credit offered,
and that a credit score can change over time to reflect changes in
the consumer’s credit history;
(B) The credit score used by the person in
making the credit decision;
(C) The range of possible credit scores under the model used to generate
the credit score;
(D) All
of the key factors that adversely affected the credit score, which
shall not exceed four key factors, except that if one of the key factors
is the number of enquires made with respect to the consumer report,
the number of key factors shall not exceed five;
(E) The date on which the credit score was
created; and
(F) The name
of the consumer reporting agency or other person that provided the
credit score.
(b) Form of the notice.
(1) In general. The risk-based pricing notice required by section 1022.72(a), (c),
or (d) must be:
(i) Clear and conspicuous; and
(ii) Provided to the consumer
in oral, written, or electronic form.
(2) Model forms. Model forms of the risk-based pricing notice required by section
1022.72(a) and (c) are contained in Appendices H-1 and H-6 of this
part. Appropriate use of Model Form H-1 or H-6 is deemed to comply
with the requirements of section 1022.72(a) and (c). Model forms of
the risk-based pricing notice required by section 1022.72(d) are contained
in Appendices H-2 and H-7 of this part. Appropriate use of Model Form
H-2 or H-7 is deemed to comply with the requirements of section 1022.72(d).
Use of the model forms is optional.
(c) Timing.
(1) General. Except as provided in paragraph (c)(3) of this section, a risk-based
pricing notice must be provided to the consumer:
(i) In
the case of a grant, extension, or other provision of closed-end credit,
before consummation of the transaction, but not earlier than the time
the decision to approve an application for, or a grant, extension,
or other provision of, credit, is communicated to the consumer by
the person required to provide the notice;
(ii) In the case of credit granted,
extended, or provided under an open-end credit plan, before the first
transaction is made under the plan, but not earlier than the time
the decision to approve an application for, or a grant, extension,
or other provision of, credit is communicated to the consumer by the
person required to provide the notice; or
(iii) In the case of a review of credit
that has been extended to the consumer, at the time the decision to
increase the annual percentage rate (annual percentage rate referenced
in section 1022.71(n)(1)(ii) in the case of a credit card) based on
a consumer report is communicated to the consumer by the person required
to provide the notice, or if no notice of the increase in the annual
percentage rate is provided to the consumer prior to the effective
date of the change in the annual percentage rate (to the extent permitted
by law), no later than five days after the effective date of the change
in the annual percentage rate.
(2) Application
to certain automobile lening transactions. When a person to whom
a credit obligation is initially payable grants, extends, or provides
credit to a consumer for the purpose of financing the purchase of
an automobile from an auto dealer or other party that is not affiliated
with the person, any requirement to provide a risk-based pricing notice
pursuant to this subpart is satisfied if the person:
(i) Provides
a notice described in sections 1022.72(a), 1022.74(e), or 1022.74(f)
to the consumer within the time periods set forth in paragraph (c)(1)(i)
of this section, section 1022.74(e)(3), or section 1022.74(f)(4),
as applicable; or
(ii) Arranges to have the auto dealer or other party provide a notice
described in sections 1022.72(a), 1022.74(e), or 1022.74(f) to the
consumer on its behalf within the time periods set forth in paragraph
(c)(1)(i) of this section, section 1022.74(e)(3), or section 1022.74(f)(4),
as applicable, and maintains reasonable policies and procedures to
verify that the auto dealer or other party provides such notice to
the consumer within the applicable time periods. If the person arranges
to have the auto dealer or other party provide a notice described
in section 1022.74(e), the person’s obligation is satisfied if the
consumer receives a notice containing a credit score obtained by the
dealer or other party, even if a different credit score is obtained
and used by the person on whose behalf the notice is provided.
(3) Timing requirements for contemporaneous purchase
credit. When credit under an open-end credit plan is granted,
extended, or provided to a consumer in person or by telephone for
the purpose of financing the contemporaneous purchase of goods or
services, any risk-based pricing notice required to be provided pursuant
to this subpart (or the disclosures permitted under section 1022.74(e)
or (f)) may be provided at the earlier of:
(i) The time of the
first mailing by the person to the consumer after the decision is
made to approve the grant, extension, or other provision of open-end
credit, such as in a mailing containing the account agreement or a
credit card; or
(ii) Within 30 days after the decision to approve the grant, extension,
or other provision of credit.
(d) Multiple credit scores.
(1) In general. When a person obtains or creates two or more credit scores and uses
one of those credit scores in setting the material terms of credit,
for example, by using the low, middle, high, or most recent score,
the notices described in paragraphs (a)(1) and (2) of this section
must include that credit score and information relating to that credit
score required by paragraphs (a)(1)(ix) and (a)(2)(ix). When a person
obtains or creates two or more credit scores and uses multiple credit
scores in setting the material terms of credit by, for example, computing
the average of all the credit scores obtained or created, the notices
described in paragraphs (a)(1) and (2) of this section must include
one of those credit scores and information relating to credit scores
required by paragraphs (a)(1)(ix) and (a)(2)(ix). The notice may,
at the person’s option, include more than one credit score, along
with the additional information specified in paragraphs (a)(1)(ix)
and (a)(2)(ix) of this section for each credit score disclosed.
(2) Examples.
(i) A person that uses
consumer reports to set the material terms of credit cards granted,
extended, or provided to consumers regularly requests credit scores
from several consumer reporting agencies and uses the low score when
determining the material terms it will offer to the consumer. That
person must disclose the low score in the notices described in paragraphs
(a)(1) and (2) of this section.
(ii) A person that uses consumer reports
to set the material terms of automobile loans granted, extended, or
provided to consumers regularly requests credit scores from several
consumer reporting agencies, each of which it uses in an underwriting
program in order to determine the material terms it will offer to
the consumer. That person may choose one of these scores to include
in the notices described in paragraph (a)(1) and (2) of this section.
