(a) Content of the notice—
(1) In general. The risk-based pricing notice required by section 222.72(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 websites of the Federal Reserve
Board and Federal Trade Commission 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 222.72(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 websites of the Federal Reserve
Board and Federal Trade Commission 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 222.72(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
222.72(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 222.72(a) and (c). Model forms of the risk-based
pricing notice required by section 222.72(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 222.72(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 222.71(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 lending 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 222.72(a), 222.74(e), or
222.74(f) to the consumer within the time periods set forth in paragraph
(c)(1)(i) of this section, section 222.74(e)(3), or section 222.74(f)(4), as
applicable; or
(ii) Arranges to have the auto dealer or other party provide a notice
described in sections 222.72(a), 222.74(e), or 222.74(f) to the consumer on
its behalf within the time periods set forth in paragraph (c)(1)(i) of this
section, section 222.74(e)(3), or section 222.74(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 222.74(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 222.74(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.
