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July 07, 2011

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Dianna

Can you please clarify "normal risk based pricing notice" from this statement:
Note: All applicants must receive a risk-based pricing notice even if the CU only used one applicant's credit score. In that situation, the CU would need to send a RBPN with credit score information to the applicant whose credit score was used and a normal risk-based pricing notice to the other co-applicant.
Thank you!

Steve Van Beek

Dianna,
Sure - in this situation I was referring to a "normal RBPN" as one that did not have the credit score information. Because the CU would not have the credit score for that applicant, it would send the H-1 form.

Rachel

Do you think it would be permissible to provide the RBPN with the credit score information to both co-appliants, even though the credit score of only one of the applicants was used to price the terms of the loan?

Steve Van Beek

Rachel,
Unfortunately not. I've added a link to the "Multiple Consumers" section above which includes the regulatory text and an example. If the RBPN has a credit score, it can only be sent to that applicant. The other co-applicant would need to receive their own RBPN - with their credit score if one was used.

Rachel

Steve,

I should of clarified my question better. I realize both need a separate notice. My question is can I provide both with their own RBPN with their own credit score information, even though one of their credit scores wasn't used in pricing the loan terms. You mentioned in the blog that the one whose credit score was not used in pricing the terms would receive a normal risk notice, and I was wondering if we could just provide them the notice with their own credit score. Does that make sense?

Steve Van Beek

Rachel,
If you have received both credit scores, you'd need to give each member a risk-based pricing notice that included their own credit score. The only exception is if the credit score played no role in the decision, but that is awfully hard to show an examiner.

The example I used with sending the co-applicant a "normal" RBPN was assuming the CU did not obtain that co-applicant's credit score.

DJ

Any updates to this discussion?
We pull credit reports on both the applicant and the joint applicant but we only use the applicant's credit score in determining the APR. The model forms don't really provide accurate information to the joint applicant when it says "We used information from your credit report to set the terms . . . "
Have you heard any further discussion on these Notices? There are many examples where the Notice received by the joint applicant provides only confusing information (consider the situation where the joint applicant has an 800 score!).
Hope it's not too late to revive this older blog discussion!

Mike Coleman

Hi Dianna,

No, there have not been any updates to the requirements for risk based pricing notices. If you have obtained a consumer report for the co-applicant, including a credit score, but the credit score played no part in the credit decision, you would still be required to send a RBPN, however, you could use model for H-1 which does not include the credit score information disclosures.

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