(a) Application for specific terms—
(1) In general. A person is not required to provide a risk-based pricing notice
to the consumer under section 222.72(a) or (c) if the consumer applies
for specific material terms and is granted those terms, unless those
terms were specified by the person using a consumer report after the
consumer applied for or requested credit and after the person obtained
the consumer report. For purposes of this section, “specific material
terms” means a single material term, or set of material terms, such
as an annual percentage rate of 10 percent, and not a range of alternatives,
such as an annual percentage rate that may be 8, 10, or 12 percent,
or between 8 and 12 percent.
(2) Example. A consumer receives a firm offer of credit from a credit card issuer.
The terms of the firm offer are based in whole or in part on information
from a consumer report that the credit card issuer obtained under
the FCRA’s firm offer of credit provisions. The solicitation offers
the consumer a credit card with a single purchase annual percentage
rate of 12 percent. The consumer applies for and receives a credit
card with an annual percentage rate of 12 percent. Other customers
with the same credit card have a purchase annual percentage rate of
10 percent. The exception applies because the consumer applied for
specific material terms and was granted those terms. Although the
credit card issuer specified the annual percentage rate in the firm
offer of credit based in whole or in part on a consumer report, the
credit card issuer specified that material term before, not after,
the consumer applied for or requested credit.
(b) Adverse action notice. A person is not required to provide a risk-based pricing notice
to the consumer under section 222.72(a), (c), or (d) if the person
provides an adverse action notice to the consumer under section 615(a)
of the FCRA.
(c) Prescreened
solicitations—
(1) In general. A person is not required to provide a risk-based pricing notice
to the consumer under section 222.72(a) or (c) if the person:
(i) Obtains
a consumer report that is a prescreened list as described in section
604(c)(2) of the FCRA; and
(ii) Uses the consumer report for the
purpose of making a firm offer of credit to the consumer.
(2) More favorable material terms. This exception
applies to any firm offer of credit offered by a person to a consumer,
even if the person makes other firm offers of credit to other consumers
on more favorable material terms.
(3) Example. A credit card issuer obtains two prescreened lists from a consumer
reporting agency. One list includes consumers with high credit scores.
The other list includes consumers with low credit scores. The issuer
mails a firm offer of credit to the high credit score consumers with
a single purchase annual percentage rate of 10 percent. The issuer
also mails a firm offer of credit to the low credit score consumers
with a single purchase annual percentage rate of 14 percent. The credit
card issuer is not required to provide a risk-based pricing notice
to the low credit score consumers who receive the 14 percent offer
because use of a consumer report to make a firm offer of credit does
not trigger the risk-based pricing notice requirement.
(d) Loans secured by residential
real property—credit score disclosure.
(1) In general. A person is not required to provide a risk-based pricing notice
to a consumer under section 222.72(a) or (c) if:
(i) The
consumer requests from the person an extension of credit that is or
will be secured by one to four units of residential real property;
and
(ii) The person
provides to each consumer described in paragraph (d)(1)(i) of this
section a notice that contains the following—
(A) A statement
that a consumer report (or credit report) is a record of the consumer’s
credit history and includes information about whether the consumer
pays his or her obligations on time and how much the consumer owes
to creditors;
(B) A statement
that a credit score is a number that takes into account information
in a consumer report and that a credit score can change over time
to reflect changes in the consumer’s credit history;
(C) A statement that the consumer’s credit
score can affect whether the consumer can obtain credit and what the
cost of that credit will be;
(D) The information required to be disclosed to the consumer pursuant
to section 609(g) of the FCRA;
(E) The distribution of credit scores among
consumers who are scored under the same scoring model that is used
to generate the consumer’s credit score using the same scale as that
of the credit score that is provided to the consumer, presented in
the form of a bar graph containing a minimum of six bars that illustrates
the percentage of consumers with credit scores within the range of
scores reflected in each bar or by other clear and readily understandable
graphical means, or a clear and readily understandable statement informing
the consumer how his or her credit score compares to the scores of
other consumers. Use of a graph or statement obtained from the person
providing the credit score that meets the requirements of this paragraph
(d)(1)(ii)(E) is deemed to comply with this requirement;
(F) 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;
(G) A statement that federal
law gives the consumer the right to obtain copies of his or her consumer
reports directly from the consumer reporting agencies, including a
free report from each of the nationwide consumer reporting agencies
once during any 12-month period;
(H) Contact information for the centralized
source from which consumers may obtain their free annual consumer
reports; and
(I) A statement
directing consumers to the Web sites of the Federal Reserve Board
and Federal Trade Commission to obtain more information about consumer
reports.
(2) Form of the
notice. The notice described in paragraph (d)(1)(ii) of this
section must be:
(i) Clear and conspicuous;
(ii) Provided on or with
the notice required by section 609(g) of the FCRA;
(iii) Segregated from other information
provided to the consumer, except for the notice required by section
609(g) of the FCRA; and
(iv) Provided to the consumer in writing
and in a form that the consumer may keep.
(3) Timing. The notice described in paragraph (d)(1)(ii) of this
section must be provided to the consumer at the time the disclosure
required by section 609(g) of the FCRA is provided to the consumer,
but in any event at or before consummation in the case of closed-end
credit or before the first transaction is made under an open-end credit
plan.
(4) Multiple credit scores—
(i) In General. When a person obtains two or
more credit scores from consumer reporting agencies and uses one of
those credit scores in setting the material terms of credit granted,
extended, or otherwise provided to a consumer, for example, by using
the low, middle, high, or most recent score, the notice described
in paragraph (d)(1)(ii) of this section must include that credit score
and the other information required by that paragraph. When a person
obtains two or more credit scores from consumer reporting agencies
and uses multiple credit scores in setting the material terms of credit
granted, extended, or otherwise provided to a consumer, for example,
by computing the average of all the credit scores obtained, the notice
described in paragraph (d)(1)(ii) of this section must include one
of those credit scores and the other information required by that
paragraph. The notice may, at the person’s option, include more than
one credit score, along with the additional information specified
in paragraph (d)(1)(ii) of this section for each credit score disclosed.
(ii) Examples.
(A) A person that uses consumer
reports to set the material terms of mortgage credit 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 notice described in paragraph (d)(1)(ii)
of this section.
(B) A
person that uses consumer reports to set the material terms of mortgage
credit 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 notice described in paragraph (d)(1)(ii)
of this section.
(5) Model form. A model form of the notice described in paragraph (d)(1)(ii) of
this section consolidated with the notice required by section 609(g)
of the FCRA is contained in Appendix H-3 of this part. Appropriate
use of Model Form H-3 is deemed to comply with the requirements of
section 222.74(d). Use of the model form is optional.
(e) Other extensions of
credit—credit score disclosure—
(1) In general. A person is not required to provide a risk-based pricing notice
to a consumer under section 222.72(a) or (c) if:
(i) The consumer
requests from the person an extension of credit other than credit
that is or will be secured by one to four units of residential real
property; and
(ii)
The person provides to each consumer described in paragraph (e)(1)(i)
of this section a notice that contains the following—
(A) A statement
that a consumer report (or credit report) is a record of the consumer’s
credit history and includes information about whether the consumer
pays his or her obligations on time and how much the consumer owes
to creditors;
(B) A statement
that a credit score is a number that takes into account information
in a consumer report and that a credit score can change over time
to reflect changes in the consumer’s credit history;
(C) A statement that the consumer’s credit
score can affect whether the consumer can obtain credit and what the
cost of that credit will be;
(D) The current credit score of the consumer or the most recent credit
score of the consumer that was previously calculated by the consumer
reporting agency for a purpose related to the extension of credit;
(E) The range of possible
credit scores under the model used to generate the credit score;
(F) The distribution of credit
scores among consumers who are scored under the same scoring model
that is used to generate the consumer’s credit score using the same
scale as that of the credit score that is provided to the consumer,
presented in the form of a bar graph containing a minimum of six bars
that illustrates the percentage of consumers with credit scores within
the range of scores reflected in each bar, or by other clear and readily
understandable graphical means, or a clear and readily understandable
statement informing the consumer how his or her credit score compares
to the scores of other consumers. Use of a graph or statement obtained
from the person providing the credit score that meets the requirements
of this paragraph (e)(1)(ii)(F) is deemed to comply with this requirement;
(G) The date on which the
credit score was created;
(H) The name of the consumer reporting agency or other person that
provided the credit score;
(I) 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;
(J) A statement that federal law gives the
consumer the right to obtain copies of his or her consumer reports
directly from the consumer reporting agencies, including a free report
from each of the nationwide consumer reporting agencies once during
any 12-month period;
(K)
Contact information for the centralized source from which consumers
may obtain their free annual consumer reports; and
(L) A statement directing consumers to the
web sites of the Federal Reserve Board and Federal Trade Commission
to obtain more information about consumer reports.
(2) Form of the notice. The notice described
in paragraph (e)(1)(ii) of this section must be:
(i) Clear
and conspicuous;
(ii) Segregated from other information provided to the consumer;
and
(iii) Provided
to the consumer in writing and in a form that the consumer may keep.
(3) Timing. The notice described in paragraph
(e)(1)(ii) of this section must be provided to the consumer as soon
as reasonably practicable after the credit score has been
obtained, but in any event at or before consummation in the case of
closed-end credit or before the first transaction is made under an
open-end credit plan.
(4) Multiple credit scores—
(i) In General. When a person obtains two or
more credit scores from consumer reporting agencies and uses one of
those credit scores in setting the material terms of credit granted,
extended, or otherwise provided to a consumer, for example, by using
the low, middle, high, or most recent score, the notice described
in paragraph (e)(1)(ii) of this section must include that credit score
and the other information required by that paragraph. When a person
obtains two or more credit scores from consumer reporting agencies
and uses multiple credit scores in setting the material terms of credit
granted, extended, or otherwise provided to a consumer, for example,
by computing the average of all the credit scores obtained, the notice
described in paragraph (e)(1)(ii) of this section must include one
of those credit scores and the other information required by that
paragraph. The notice may, at the person’s option, include more than
one credit score, along with the additional information specified
in paragraph (e)(1)(ii) of this section for each credit score disclosed.
(ii) Examples. The manner in which multiple
credit scores are to be disclosed under this section are substantially
identical to the manner set forth in the examples contained in paragraph
(d)(4)(ii) of this section.
(5) Model form. A model form of the notice described in paragraph (e)(1)(ii) of
this section is contained in Appendix H-4 of this part. Appropriate
use of Model Form H-4 is deemed to comply with the requirements of
section 222.74(e). Use of the model form is optional.
(f) Credit score not available—
(1) In general. A person is not required to provide a risk-based
pricing notice to a consumer under section 222.72(a) or (c) if the
person:
(i) Regularly obtains credit scores
from a consumer reporting agency and provides credit score disclosures
to consumers in accordance with paragraphs (d) or (e) of this section,
but a credit score is not available from the consumer reporting agency
from which the person regularly obtains credit scores for a consumer
to whom the person grants, extends, or provides credit;
(ii) Does not obtain a credit
score from another consumer reporting agency in connection with granting,
extending, or providing credit to the consumer; and
(iii) Provides to the consumer a notice
that contains the following—
(A) 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;
(B) A statement that a credit
score is a number that takes into account information in a consumer
report and that a credit score can change over time in response to
changes in the consumer’s credit history;
(C) A statement that credit scores are important
because consumers with higher credit scores generally obtain more
favorable credit terms;
(D) A statement that not having a credit score can affect whether
the consumer can obtain credit and what the cost of that credit will
be;
(E) A statement that
a credit score about the consumer was not available from a consumer
reporting agency, which must be identified by name, generally due
to insufficient information regarding the consumer’s credit history;
(F) 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 consumer report;
(G) A statement that federal law gives the
consumer the right to obtain copies of his or her consumer reports
directly from the consumer reporting agencies, including a free consumer
report from each of the nationwide consumer reporting agencies once
during any 12-month period;
(H) The contact information for the centralized source from which
consumers may obtain their free annual consumer reports; and
(I) A statement directing consumers
to the web sites of the Federal Reserve Board and Federal Trade Commission
to obtain more information about consumer reports.
(2) Example. A person that uses consumer reports
to set the material terms of non-mortgage credit granted, extended,
or provided to consumers regularly requests credit scores from a particular
consumer reporting agency and provides those credit scores and additional
information to consumers to satisfy the requirements of paragraph
(e) of this section. That consumer reporting agency provides to the
person a consumer report on a particular consumer that contains one
trade line, but does not provide the person with a credit score on
that consumer. If the person does not obtain a credit score from another
consumer reporting agency and, based in whole or in part on information
in a consumer report, grants, extends, or provides credit to the consumer,
the person may provide the notice described in paragraph (f)(1)(iii)
of this section. If, however, the person obtains a credit score from
another consumer reporting agency, the person may not rely upon the
exception in paragraph (f) of this section, but may satisfy the requirements
of paragraph (e) of this section.
(3) Form of the
notice. The notice described in paragraph (f)(1)(iii) of this
section must be:
(i) Clear and conspicuous;
(ii) Segregated from other
information provided to the consumer; and
(iii) Provided to the consumer in writing
and in a form that the consumer may keep.
(4) Timing. The notice described in paragraph (f)(1)(iii) of this
section must be provided to the consumer as soon as reasonably practicable
after the person has requested the credit score, but in any event
not later than consummation of a transaction in the case of closed-end
credit or when the first transaction is made under an open-end credit
plan.
(5) Model form. A model form of the notice
described in paragraph (f)(1)(iii) of this section is contained in
Appendix H-5 of this part. Appropriate use of Model Form H-5 is deemed
to comply with the requirements of section 222.74(f). Use of the model
form is optional.
