Unraveling the Risk-Based Pricing Notice Requirements

This article reviews the risk-based pricing notice requirements, exceptions, model forms, and common questions that may help credit unions clarify the applicability of some of the requirements. 

Written by Alma Calcano, Regulatory Compliance Specialist, NAFCU

The Fair Credit Reporting Act’s (FCRA) implementing regulation, Regulation V, includes in section 1022.72 a requirement for credit unions to send risk-based pricing notices (RBPNs) to members. Risk-based pricing occurs when credit unions offer different terms to different members based on the member's risk of nonpayment to compensate for the higher risk of default. Each credit union uses its own process to determine the risk that members may default on a loan, but most use information such as a member’s credit score, employment status, income and other outstanding debts, among other factors, when making the determination.