What might trigger the need for a Risk-based Pricing Notice?

The need for a Risk-based Pricing Notice is triggered when a financial institution uses a credit report that indicates the applicant's creditworthiness to set terms for credit that differ from those available to other consumers. When a consumer applies for credit, the lender may review their credit report and, based on this information, decide to offer credit terms that are not as favorable due to perceived risk, such as higher interest rates or less favorable conditions.

In scenarios where terms vary and potentially unfavorable terms are based on the applicant's credit information, providing a Risk-based Pricing Notice becomes essential. This notice informs the consumer that they received different terms due to their credit report, ensuring transparency and compliance with regulations aimed at protecting consumers.

Other options do not specifically relate to instances where credit decisions are made based on different terms arising from credit report assessments. For example, approving or disqualifying a credit application does not necessitate a Risk-based Pricing Notice, nor does receiving a poor credit report unless it directly impacts the terms offered.