Do the risk-based-pricing notice requirements apply to business purpose credit?
March 1, 2013
Q: Do the risk-based-pricing notice requirements apply to business purpose credit?
A: No. The Fair Credit Reporting Act requirements only apply to consumer credit (i.e., primarily for personal, family, or household purposes).
The risk-based-pricing regulations come into play when a credit union:
Uses a consumer report in connection with a consumer credit application or extension; and
Based at least in part on that report, grants or extends credit to a consumer on “material terms” (i.e., APR) that are “materially less favorable” (i.e., higher cost for credit) than the most favorable terms available to a substantial portion of the credit union’s members for the same type of credit.
NEXT: Is an adverse action notice required when the member fails to return all of the paperwork necessary to process the loan?