Risk Base Pricing-> Credit News Lenders Notice

Effective January 1, 2011 New Notice On Risk Base Pricing
By: Steve Upton
 
Feb. 28, 2011 - PRLog -- Risk-Base Pricing Notice

Since January 1, 2011 all lenders are now required to give one or two forms of disclosures to adhere to the federal regulations.

The RBP notice informs consumers that they may have received less favorable credit terms than others with better credit histories. This notice will be sent only to approved applicants or customers who likely did not receive the lender's most favorable terms. The Credit Score Disclosure (CSD) notice is used by lenders as an alternative method of complying with the Risk-Based Pricing Rule. The CSD is sent to all approved consumers with their credit score as a way of providing greater understanding of how they are evaluated during the lending decision process.

Visit http://creditscoresandcredit.com for details

Risk-based pricing reflects the common practice of setting credit terms, such as interest rate or credit limit, according to a consumer's credit risk. Lenders that employ risk-based pricing generally offer more favorable terms to consumers with credit histories that reflect lower risk and less favorable terms to those whose credit histories reflect higher risk.

In addition to further increasing the level of transparency, the Risk-Based Pricing regulation is intended to broaden the understanding of credit reports and credit scores, as well as to improve the accuracy of your credit report. Not only does the Risk-Based Pricing notice inform you that your credit history is being used to set the credit terms offered, it also provides information to help you obtain, review and check the accuracy of your credit report. See Figure 1 below for a sample RBP notice.

Unlike the Credit Score Disclosure notice which includes specific credit score related information, the Risk-Based Pricing notice focuses on information about your credit report. Key aspects of the RBP notice are:

•Use of credit report information in the making of the lending decision – Informs you that your credit report was used in the lending decision and, as a result of the your credit history, the terms offered may be less favorable than what is provided to consumers with credit histories that represent lower risk.

Though the notice indicates you may have received terms that are less favorable, with the exception of a few circumstances, most consumers receiving this notice will likely have received less favorable terms from the lender.
•Information regarding how to obtain a free copy of your credit report – As a result of the new regulation, recipients of the RBP notice (i.e., consumers who are approved for credit but have potentially received less favorable terms) are entitled to receive a free copy of their credit report. Previously, this was only available to consumers when their credit application was declined. Now, in both cases, requests for a free copy of the credit report used in the lending decision must be made within 60 days of receiving the notice. It is important to keep in mind that the no-charge copy of your credit report will not include your credit score. The credit score and credit report are equally important and should be monitored periodically to ensure your overall credit health. To learn more about your credit score, see the FICO® Scores section.
•Reminder to correct credit report mistakes – Credit reporting agencies are independent, for-profit companies that compile information about you (e.g., whether you pay your bills on time and how much you owe to creditors) from a variety of sources. Sources may include your bank, credit card companies, mortgage provider, utilities, etc. The information they provide is maintained in your credit report. Based on the number of reporting organizations and the type of information reported, it is possible that your credit report could contain a mistake. Mistakes in your credit report may affect your ability to get credit and/or the quality of the credit terms you receive. You have the right to and should dispute inaccurate information in your credit report.
•Credit reporting agency (CRA) information – The RBP notice includes the credit reporting agency name and contact information. This information is intended to facilitate the process of obtaining a no-charge copy of your credit report from the CRA and rectifying any errors in your credit history.
If you received a Risk-Based Pricing notice, you will want to make sure you request the no-charge copy of your credit report from the listed credit reporting agency within 60 days. Upon receiving the credit report, you should confirm its accuracy and request corrections that may be necessary.

Please note that it is expected that most lenders will opt to use the Credit Score Disclosure notice rather than the RBP notice.

Visit http://creditscoresandcredit.com for details


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Source:Steve Upton
Email:***@improvecredit.biz Email Verified
Zip:28202
Tags:Risk base pricing
Industry:Financial, Government, Legal
Location:Charlotte - North Carolina - United States
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Page Updated Last on: Aug 07, 2011
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