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Following a public comment period, the �鶹��ý Trade Commission and the �鶹��ý Reserve Board have announced final changes to the Risk-Based Pricing Rule to require creditors to disclose credit score information to consumers when a credit score is used in setting or adjusting credit terms.

Risk-based pricing refers to the practice of setting or adjusting the price and other terms of credit provided to a particular consumer based on the consumer’s creditworthiness. Since January 1, 2011, the Rule has required creditors to provide consumers with a “risk-based pricing” notice when, based on the consumer’s credit report, the creditor provides credit to the consumer on less-favorable terms than it provides to other consumers. Consumers who receive the risk-based pricing notice can obtain a free credit report to check their report’s accuracy. As an alternative to providing a risk-based pricing notice, the Rule allows creditors to provide all credit applicants with a free credit score and information about their score.

The amendments to the Rule reflect the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, which requires creditors to disclose a credit score in risk-based pricing notices, if one was used in making the credit decision, along with certain other additional information. The Dodd-Frank requirements go into effect on July 21, 2011.

The amendments to the Rule add content to risk-based pricing notices, provide new model notices, and specify certain technical requirements regarding credit score disclosures. In addition, the final Rule includes language that clarifies the circumstances under which a creditor using a proprietary credit score – a credit score developed for that creditor’s own use – must disclose that score to the consumer. The amendments are effective 30 days after publication in the �鶹��ý Register, but companies can use the model forms to comply with the Dodd-Frank requirements before that date.

The Commission vote authorizing the issuance of the final Rule was 5-0.

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