Credit Score Disclosure Exception Notice

Risk-Based Pricing Rule of the FACT Act

With MicroBilt’s Credit Score Disclosure Exception Notice service, MicroBilt customers can easily meet the requirements of the new Risk Based Pricing Rule issued by the Federal Reserve Board and Federal Trade Commission.

Risk Based Pricing

Effective Jan. 1, 2011, all companies that use a credit report or score in connection with a credit decision must send a risk-based pricing notice to a consumer when the company grants credit on material terms that are not the most favorable terms offered to a substantial proportion of consumers. Risk based pricing is the practice of setting the interest rate or other terms of credit to a consumer based on the consumer’s credit report or score.

The Risk Based Pricing Rule provides companies with two compliance options: the Risk Based Pricing Notice or a Credit Score Disclosure Exception Notice. MicroBilt offers the Credit Score Disclosure Exception Notice as a standard service for all customer data contracts.

Credit Score Disclosure Exception Notice Service

The Credit Score Disclosure Exception Notice is a safe harbor option for creditors and stipulates that a creditor must provide the Credit Score Disclosure Exception Notice to every borrower when a credit report or score is used to make a credit decision. Unlike the Risk Based Pricing Notice, this compliance method does not require the lender to figure out which consumers should get a notice.

With MicroBilt’s Credit Score Disclosure Exception Notice service, MicroBilt customers can generate the Credit Score Disclosure Exception Notice automatically with a credit report request. The Credit Score Disclosure Exception Notice includes several elements that are specific to the consumer:

• The consumer’s credit score
• The source of the credit score
• The range of possible scores
• The consumer's score rank relative to other consumers scored under the same model.

Exceptions

Application for Specific Terms. No notice required if consumer applies for specific terms and is granted those terms (unless terms were specified by the lender after reviewing a credit report).

Prescreened Solicitations. No notice required if you use a credit report to make a "firm offer" of credit, even where you make other firm offers of credit to other consumers on more favorable terms.

Adverse Action Notice. No notice required if you provide an "adverse action" notice to the consumer.

Mortgage/HELOC Credit Score Disclosure Exception. A lender is not required to provide the Risk-Based Pricing Notice if the lender provides to all consumers who request a loan that will be secured by one to four units of residential real property (e.g., purchase money mortgage, mortgage refinance, home equity line of credit, and home equity loan) the model Residential Mortgage Credit Score Disclosure Exception Notice.