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Fed FTC finalize credit disclosure changes
WASHINGTON (7/7/11)--The Federal Reserve and the Federal Trade Commission have issued a final version of rules that require creditors to add new details to the risk-based pricing (RBP) notices that are distributed to their members. Creditors are required to disclose credit scores and related information to consumers in risk-based pricing (RBP) notices under the Fair Credit Reporting Act (FCRA) if a credit score was used in setting the credit terms. The new rule will also require creditors to disclose on adverse action notices a credit score that was used in taking any adverse action against a consumer and any information relating to that score. The credit score disclosures are required by the Dodd-Frank Act. Credit unions and other financial institutions will need to add the following to their RBP and adverse action notices:
• A statement that a credit score takes into account information in a consumer report and a credit score can change over time; • The specific numerical credit score used in making the credit decision; • The range of possible credit scores; • Key factors that adversely affected the credit score such as late payments and high credit utilization; • The date on which the credit score was created; and • The name of the consumer reporting agency that provided the credit score.
The Credit Union National Association (CUNA) has said that whether or not credit unions will need to replace their current RBP forms with new ones is not certain. The answer to that question depends on whether a credit union uses a consumer's credit score to set the material terms of credit, CUNA added. The new rules will become effective 30 days after they are published in the Federal Register. The Fed said that it expects the rules to be published soon.
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