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Module 3

Adverse Action Disclosures - Section 615(a) and (b); 15 U.S.C. § 1681m(a) and 

(b)

Section 615(a)-(b) requires users of consumer reports, such as creditors, to make certain disclosures 

when they:

1. take adverse actions with respect to consumers, based in whole or in part on information 

contained in a consumer report;

2. deny credit for personal, family, or household purposes or increase the charge for such credit 

based in whole or in part on information obtained from a person other than a consumer 

reporting agency bearing upon the consumer’s credit worthiness, credit standing, credit 

capacity, character, general reputation, personal characteristics, or mode of living or 

3. take certain adverse action based in whole or in part on information from an affiliate. 

The disclosure requirements are discussed separately below.

Information Obtained From a Consumer Reporting Agency

Section 615(a), Duties of Users Taking Adverse Actions on the Basis of Information Contained in 

Consumer Reports, provides that when adverse action is taken with respect to any consumer based 

in whole or in part on any information contained in a consumer report, the person, such as a

financial institution, must:

1. Provide oral, written, or electronic notice of the adverse action to the consumer;

2. Provide to the consumer written or electronic disclosures of a numerical credit score 

used by such person in taking any adverse action based in whole or in part on any 

information in a consumer report and the following information:

a. The range of possible credit scores under the model used;

b. All of the key factors that adversely affected the credit score, which shall not exceed 

four key factors, except that if one of the key factors is the number of enquiries made 

with respect to the consumer report, the number of key factors shall not exceed five;

c. The date on which the credit score was created; and

d. The name of the person or entity that provided the credit score or credit file upon 

which the credit score was created;

3. Provide to the consumer orally, in writing, or electronically:

a. The name, address, and telephone number of the consumer reporting agency from 

which it received the information (including a toll-free telephone number established 

by the agency, if the consumer reporting agency maintains files on a nationwide 

basis); and
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b. A statement that the consumer reporting agency did not make the decision to take the 

adverse action and is unable to provide the consumer the specific reasons why the 

adverse action was taken;

4. Provide to the consumer an oral, written, or electronic notice of the consumer’s right to 

obtain a free copy of the consumer report from the consumer reporting agency within 60 

days of receiving notice of the adverse action, and the consumer’s right to dispute the 

accuracy or completeness of any information in the consumer report with the consumer 

reporting agency.

Information Obtained from Third Parties Other than Consumer Reporting Agencies (Including 

Affiliates)

Section 615(b), Adverse Action Based on Information Obtained from Third Parties Other than 

Consumer Reporting Agencies, provides that, in general, whenever credit for personal, family, or 

household purposes involving a consumer is denied or the charge for such credit is increased either 

wholly or partly because of information obtained from a person other than a consumer reporting 

agency bearing upon the consumer’s credit worthiness, credit standing, credit capacity, character, 

general reputation, personal characteristics, or mode of living, the user of such information shall:

1. At the time such adverse action is communicated, clearly and accurately disclose to the 

consumer his right to make a written request for the reasons for such adverse action 

within 60 days after learning of such adverse action; and 

2. Within a reasonable period of time after receipt of such written request from the 

consumer, disclose the nature of the information to the consumer.

If the adverse action described in 615(b)(2)(B) is (i) taken based in whole or in part on information 

from a person related by common ownership or affiliated by common corporate control to the 

person taking the action, and (ii) bears on the credit worthiness, credit standing, credit capacity, 

character, general reputation, personal characteristics, or mode of living of the consumer, and (iii) 

does not include information solely as to transactions or experiences between the consumer and the 

person furnishing the information or information in a consumer report, then the person taking the 

adverse action shall:

1. Notify the consumer of the action, including a statement that the consumer may obtain 

the information upon written request from the consumer received within 60 days after 

transmittal of the notice required; and 

2. Not later than 30 days after receipt of such written request from the consumer, disclose 

to the consumer the nature of the information upon which the action is based. 
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Module 3

Risk-Based Pricing Notice - Section 615(h); 15 U.S.C. § 1681m(h); 

12 CFR 1022 (Subpart H)

Section 615(h) of the Fair Credit Reporting Act (FCRA) generally requires a user of consumer 

reports, such as a creditor, to provide a risk-based pricing notice to a consumer when the creditor, 

based on a consumer report, extends credit to the consumer on terms that are “materially less 

favorable” than the terms the creditor has extended to other consumers. On January 15, 2010, the 

Federal Reserve and the Federal Trade Commission (FTC) published final rules in the Federal 

Register (75 Fed. Reg. 2724) implementing this section of the FCRA. 

The risk-based pricing notice requirement is designed primarily to improve the accuracy of 

consumer reports by alerting consumers to the existence of negative information in their consumer 

reports so that the consumers can, if they choose, check their consumer reports for accuracy and 

correct any inaccurate information. This notice provision is meant to complement an existing 

provision of the FCRA, Section 615(a), whereby a creditor that denies a consumer’s application for

credit, based in whole or in part on information in a consumer’s report, must provide an adverse 

action notice. Section 615(h), covers the situation where credit is offered on “materially less 

favorable terms,” rather than being denied.

The Dodd-Frank Act amended section 615(h) of the FCRA to require a person to disclose a 

consumer’s credit score and certain information relating to the credit score, if a credit score is used 

in making the credit decision. On July 15, 2011, the Federal Reserve Board and the FTC published 

final rules (effective August 15, 2011) amending the risk-based pricing regulation to effect the 

Dodd-Frank Act changes (76 FR 41602). On December 21, 2011, the CFPB restated the FCRA 

regulations at 12 CFR Part 1022. (76 Fed. Reg. 79308).

Key Definitions (12 CFR 1022.71)

The following definitions pertain to the rules governing the risk-based pricing regulation:

Material terms means in general: 

a. For open-end credit (except as provided in (b) and (d) below), the annual percentage rate 

(APR) required to be disclosed in the account opening disclosures required under 

Regulation Z. This does not include a temporary initial rate that is lower than the rate 

that will apply when the temporary rate expires, any penalty rate that applies upon the 

occurrence of specific events (such as a late payment), or any fixed APR option for a 

home equity line of credit;

b. For credit cards (other than a credit card used to access a home equity line of credit or a 

charge card), the APR that applies for purchases. For credit cards without a purchase 

APR, “material terms” means the APR that varies based on consumer report information 

and that has the most significant financial impact on consumers;

c. For closed-end credit, the APR required to be disclosed prior to consummation under the 

closed-end provisions of Regulation Z; and
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d. For credit that does not have an APR, the financial term that varies based on consumer 

report information and that has the most significant financial impact on consumers, such 

as an annual membership fee for a charge card. 

Materially less favorable means, generally, that the terms granted, extended, or otherwise provided 

to a consumer differ from the terms granted, extended, or otherwise provided to another consumer 

such that the cost of credit to a consumer would be significantly greater than the cost of credit 

granted, extended, or otherwise provided to the other consumer. Relevant factors in determining the 

significance of a difference in cost include the type of credit product, the term of the credit 

extension, and the extent of the difference between the material terms granted, extended, or 

otherwise provided to the two consumers.

General requirements (12 CFR 1022.72-73)

A person must provide to a consumer a notice (“risk-based pricing notice”) in the form and manner 

prescribed by the regulation if: 

1. The person uses a consumer report in connection with an application for, or a grant, 

extension, or other provision of, credit to a consumer for personal, family, or household 

purposes; and

2. Based in whole or in part on the consumer report, the person grants, extends, or 

otherwise provides credit to that consumer on material terms that are materially less 

favorable than the most favorable material terms available to a substantial proportion of 

consumers from that person.

The obligation to provide the notice applies to the creditor to whom the obligation is initially 

payable, i.e., the original creditor. This interpretation excludes brokers and other intermediaries who 

do not themselves grant, extend, or provide credit to consumers. See preamble to the final 

regulation (75 FR 2730)(January 15, 2010).

Determination of which consumers must receive notice (12 CFR 1022.72(b)). A person may 

determine, on a case-by-case basis, whether a consumer has received material terms that are 

materially less favorable by comparing the material terms offered to the consumer to the material 

terms offered to other consumers for a specific type of credit product. A “specific type of credit 

product” means one or more credit products with similar features that are designed for similar 

purposes. Examples include student loans, unsecured credit cards, secured credit cards, new 

automobile loans, used automobile loans, fixed-rate mortgage loans, and variable-rate mortgage 

loans.

Because making such a direct comparison between consumers may not be operationally feasible, 

the rules provide two alternative methods, a credit score proxy method and a tiered pricing method, 

both of which are described as follows: 

1. Credit score proxy method (12 CFR 1022.72(b)(1)). If a person uses credit scores to set the 

material terms of credit, the person may determine a cutoff score that represents the point at 

which approximately 40 percent of its consumers have higher credit scores and 60 percent of 

its consumers have lower credit scores. The person may then provide a risk-based pricing 

notice to each consumer who has a credit score lower than the cutoff score. 
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Credit Score Proxy Example

The number of all, or a representative sample of, consumers to whom the person

granted credit for a specific type of credit product

10,000

40 percent of consumers 4,000

Credit scores of the 4,000 consumers with the highest credit scores 700 or higher

Cutoff score 700

Credit scores of those consumers to whom the person must provide a risk-based 

pricing notice, because the consumers’ scores are lower than cutoff score

699 or lower

Alternative to 40/60 cutoff. The regulation provides an alternative to the 40/60 cutoff 

discussed above for situations where more than 40 percent of consumers (e.g., 80 percent) 

receive the most favorable material terms. In such situations, the person may set a different 

cutoff score based on its historical experience. The cutoff score would be set at a point at 

which the approximate percentage of consumers who historically have received the most 

favorable material terms based on their credit score would not receive a notice in the future. 

Under this alternative, the risk-based pricing notices would be provided to the approximate 

percentage of consumers who historically have been granted credit on material terms other 

than the most favorable terms. 

For example, based on a sample of credit extended in the past six months, a creditor may 

determine that approximately 80 percent of its consumers received credit at its lowest APR 

(i.e., the most favorable material terms), and 20 percent of its consumers received credit at a 

higher APR (i.e., material terms other than the most favorable). Approximately 80 percent of 

the sampled consumers had a credit score at or above 750, and 20 percent had a credit score 

below 750. As a result, the card issuer could select 750 as its cutoff score. Consumers who 

have credit scores lower than 750 would receive the risk-based pricing notice. See preamble 

to the final regulation (75 FR at 2733)(January 15, 2010).

Recalculation. A person must recalculate the score no less than every two years.

Specific type of product (sampling approach). A person must calculate the cutoff score by 

considering the credit scores of all, or a representative sample of, the consumers who have 

received credit for a specific type of credit product. 

New entrants or new products (secondary approach in limited circumstances). For new 

entrants into the credit business or for new products subject to risk-based pricing, a person

may determine the cutoff score based on information from market research or other thirdparty sources for a specific type of credit product. For a newly acquired credit portfolio, a 

person may determine the cutoff score from information obtained from the party from which 

it acquired the portfolio. The person must recalculate the cutoff score using the scores of its 

own consumers within one year after it begins using a score derived from market research, 

third-party data, or the party from which it acquired the portfolio. If, within that one year, it 

has not granted credit to a sufficient number of new consumers, thus preventing it from 

having sufficient data with which to recalculate a cut-off score based on the credit scores of 

its own consumers, it may continue to use the original cutoff score until it obtains sufficient 

data on which to base the calculation. However, within two years, it must calculate its own 

cutoff score if it has granted credit to some new consumers within those two years.
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Use of multiple credit scores. For a person that generally uses two or more credit scores to 

set material credit terms, the person must determine the cutoff score using the same method 

used to evaluate multiple scores when making credit decisions (for example, using an 

average credit score). If the person does not consistently use the same method for evaluating 

multiple scores, the person must use a reasonable means. For example, the person may use 

any one of the methods that the person ordinarily uses or the average credit score of each 

consumer to calculate the credit score by a reasonable means.

No credit score available for a consumer. If no credit score is available for a consumer, a 

person must assume that it is granting credit on materially less favorable terms and thus 

must provide a risk-based pricing notice to the consumer.

2. Tiered pricing method (12 CFR 1022.72(b)(2)). If a person sets the material terms of credit 

by assigning each consumer to one of a discrete number of pricing tiers for a specific type of 

credit product, based in whole or in part on a consumer report, the person may provide a 

risk-based pricing notice to each consumer who is not assigned to the top pricing tier or 

tiers.

If the person uses four or fewer pricing tiers, it complies by providing risk-based pricing 

notices to all consumers who do not qualify for the top, best-priced tier. If the person uses 

five or more pricing tiers, it complies by providing the notices to all consumers who do not 

qualify for the two top, best-priced tiers and any other tier that, combined with the top two 

tiers, equals no less than the top 30 percent and no more than the top 40 percent of the total 

number of tiers.
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Tiered Pricing Example

Four or fewer tiers

Top tier = best rate APR Notice requirements.

Tier 1 (top) 8% No risk-based pricing notice required.

Tier 2 10% Risk-based pricing notice required for Tiers 2, 3 and 4.

Tier 3 12%

Tier 4 14%

Five or more tiers (5 tiers)

Top tier = best rate APR

Tier 1 (top) 8% No risk-based pricing notice required for top 30% to 40% of 

tiers. 

Top two tiers comprise 2 out of 5 (40%) of the number of 

tiers.

Tier 2 10%

Tier 3 12% Risk-based notices required for Tiers 3-5.

Tier 4 14%

Tier 5 16%

Five or more tiers (9 tiers)

Top tier = best rate APR

Tier 1 (top) 8% No risk-based pricing notice required for top 30% to 40% of 

tiers. 

Top three tiers comprise 3 out of 9 (33%) of the number of 

tiers.

Tier 2 10%

Tier 3 12%

Tier 4 14% Risk-based notices required for Tiers 4-9.

Tier 5 16%

Tier 6 18%

Tier 7 20%

Tier 8 22%

Tier 9 24%
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Application to credit card issuers (12 CFR 1022.72(c)). A credit card issuer may use any of 

the methods in 12 CFR 1022.72(b) to identify consumers to whom it must provide a riskbased pricing notice. Alternatively, the card issuer may provide the notice when:

1. A consumer applies for a credit card in connection with an application program or in 

response to a solicitation, and more than one purchase APR may apply under the 

program or solicitation, and 

2. Based in whole or in part on a consumer report, the credit card is issued to a 

consumer with an APR that is higher than the lowest APR available in connection 

with the application or solicitation. 

The risk-based pricing requirements do not apply to a card issuer if the credit card program 

offers only a single annual APR (other than temporary initial rates or penalty rates) or if the 

issuer offers the consumer the lowest possible APR under the credit card program. 

Content of the notice (12 CFR 1022.73(a)(1)). The risk-based pricing notice must include:

1. A statement that a consumer report (or credit report) includes information about the 

consumer’s credit history and the type of information included in that history;

2. A statement that the consumer is encouraged to verify the accuracy of the 

information contained in the consumer report and has the right to dispute any 

inaccurate information in the report;

3. The identity of each consumer reporting agency that furnished a consumer report 

used in the credit decision;

4. A statement that federal law gives the consumer the right to obtain a copy of a 

consumer report from the consumer reporting agency or agencies identified in the 

notice without charge for 60 days after receipt of the notice;

5. A statement informing the consumer how to obtain a consumer report from the 

consumer reporting agency or agencies identified in the notice and providing contact 

information (including a toll-free telephone number, where applicable) specified by 

the consumer reporting agency or agencies; 

6. A statement directing consumers to the website of the CFPB to obtain more 

information about consumer reports; 

7. if a credit score of the consumer to whom a person grants, extends, or otherwise 

provides credit is used in setting the material terms of credit:

a. A statement that a credit score is a number that takes into account information in a 

consumer report, that the consumer‘s credit score was used to set the terms of credit 

offered, and that a credit score can change over time to reflect changes in the 

consumer‘s credit history;

b. The credit score used by the person in making the credit decision;

c. The range of possible credit scores under the model used to generate the credit score;
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d. All of the key factors that adversely affected the credit score, which shall not exceed 

four key factors, except that if one of the key factors is the number of enquiries made 

with respect to the consumer report, the number of key factors shall not exceed five;

e. The date on which the credit score was created; and

f. The name of the consumer reporting agency or other person that provided the credit 

score;

8. A statement that the terms offered, such as the APR, have been set based on 

information from a consumer report; and

9. A statement that the terms offered may be less favorable than the terms offered to 

consumers with better credit histories.

See Appendix H-1 and H-6 of the regulation for model forms for the risk-based pricing 

notice.

Account Review (12 CFR 1022.72(d)). Generally, a person must provide an account review riskbased pricing notice to the consumer if the person, based in whole or in part on a consumer 

report, increases the consumer’s APR after a review of the consumer’s account, unless one of 

the exceptions in 12 CFR 1022.74 applies (for example, the creditor provides an adverse action 

notice). 

Content of account review risk-based pricing notice (12 CFR 1022.73(a)(2)). The account 

review risk-based pricing notice must include: 

1. A statement that a consumer report (or credit report) includes information about the 

consumer’s credit history and the type of information included in that history;

2. A statement that the consumer is encouraged to verify the accuracy of the 

information contained in the consumer report and has the right to dispute any 

inaccurate information in the report;

3. The identity of each consumer reporting agency that furnished a consumer report 

used in the account review;

4. A statement that federal law gives the consumer the right to obtain a copy of a 

consumer report from the consumer reporting agency or agencies identified in the 

notice without charge for 60 days after receipt of the notice;

5. A statement informing the consumer how to obtain a consumer report from the 

consumer reporting agency or agencies identified in the notice and providing contact 

information (including a toll-free telephone number, where applicable) specified by 

the consumer reporting agency or agencies; 

6. A statement directing consumers to the website of the CFPB to obtain more 

information about consumer reports; 

7. if a credit score of the consumer whose extension of credit is under review is used in 

increasing the APR:
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a. A statement that a credit score is a number that takes into account information in a 

consumer report, that the consumer‘s credit score was used to set the terms of credit 

offered, and that a credit score can change over time to reflect changes in the 

consumer‘s credit history;

b. The credit score used by the person in making the credit decision;

c. The range of possible credit scores under the model used to generate the credit score;

d. All of the key factors that adversely affected the credit score, which shall not exceed 

four key factors, except that if one of the key factors is the number of enquires made 

with respect to the consumer report, the number of key factors shall not exceed five;

e. The date on which the credit score was created; and

f. The name of the consumer reporting agency or other person that provided the credit 

score.

8. A statement that the person has conducted a review of the account using information 

from a consumer report; and

9. A statement that as a result of the review, the APR on the account has been increased 

based on information from a consumer report. 

NOTE: Items 1 through 7 for the account review risk-based pricing notice are substantially 

the same as items 1 through 7 for the risk-based pricing notice. Only the last two items in 

each list are different.

See Appendix H-2 and H-7 of the regulation for model forms for the account review riskbased pricing notice.

Form of the notice (12 CFR 1022.73(b)).The risk-based pricing notices and the account review 

risk-based pricing notices must be clear and conspicuous and provided to the consumer in oral, 

written, or electronic form. Persons, such as creditors, are deemed to be in compliance with the 

disclosure requirements through use of the optional, applicable model forms, found in Appendix 

H of the regulation. 

Timing (12 CFR 1022.73(c)). The timing requirement depends on the specific type of credit 

transaction as specified below:

1. For closed-end credit, a risk-based pricing notice must be provided to the consumer 

after the decision to approve a credit request is communicated to the consumer, but 

before consummation of the transaction. 

2. For open-end credit, the notice must be provided after the decision to grant credit is 

communicated to the consumer, but before the first transaction under the plan has 

been made.

3. For account reviews, the notice must be provided at the time that the decision to

increase the APR is communicated to the consumer. If no notice of the increase in 

the APR is provided to the consumer prior to the effective date of the APR change, 

the notice must be provided no later than five days after the effective date of the 

APR change. 
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4. For automobile lending transactions made through an auto dealer or other party that 

is unaffiliated with the creditor, the creditor may provide a risk-based pricing notice 

in the time periods described above for closed-end credit. Alternatively, the creditor 

may arrange to have the auto dealer or other party provide a risk-based pricing notice 

to the consumer on its behalf within these time periods and maintain reasonable 

policies and procedures to verify that the auto dealer provides the notices to

consumers within the applicable time periods. If the creditor arranges to have the 

auto dealer or other party provide a credit score disclosure exception notice, the 

creditor complies if the consumer receives a notice containing a credit score obtained 

by the dealer or other party, even if a different credit score is obtained and used by 

the creditor. 12 CFR 1022.73(c)(2)

5. For credit that is granted under an open-end credit plan to a consumer in person or by 

telephone for contemporaneous purchase of goods or services, the risk-based pricing 

notice may be provided at the earlier of:

a. The time of the first mailing to the consumer after the decision is made to 

approve the credit, such as in a mailing containing the account agreement or a 

credit card; or

b. Within 30 days after the decision to approve the credit.

Multiple credit scores (12 CFR 1022.73(d)). When a person obtains or creates two or more credit 

scores and uses one of those credit scores in setting the material terms of credit (e.g., by using the 

low, middle, high, or most recent score), the risk-based pricing notice and the account review notice 

must include that credit score and the information about the credit score described in the notice 

content requirements above. 

When a person obtains or creates two or more credit scores and uses multiple credit scores in setting 

the material terms of credit (e.g., by computing the average of all the credit scores obtained or 

created, the risk-based pricing notice and the account review notice must include one of those credit 

scores and the information about the credit score described previously in the notice content 

requirements. The notice may, at the person‘s option, include more than one credit score and the 

related information for each credit score disclosed.

Examples. 

1. A person that uses consumer reports to set the material terms of credit cards granted, 

extended, or provided to consumers regularly requests credit scores from several consumer 

reporting agencies and uses the low score when determining the material terms it will offer 

to the consumer. That person must disclose the low score in the risk-based pricing notice 

and the account review notice.

2. A person that uses consumer reports to set the material terms of automobile loans granted, 

extended, or provided to consumers regularly requests credit scores from several consumer 

reporting agencies, each of which it uses in an underwriting program in order to determine 
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the material terms it will offer to the consumer. That person may choose one of these scores 

to include in the risk-based pricing notice and the account review notice.

Exceptions (12 CFR 1022.74)

The rules contain a number of exceptions to the risk-based pricing notice requirement, as follows:

1. when a consumer applies for specific material terms of credit (e.g., a specific APR), and 

receives them, unless those terms were specified by the creditor using a consumer report 

after the consumer applied for the credit and after the creditor obtained the consumer 

report (12 CFR 1022.74(a)); 

2. when a person such as a creditor provides a notice of adverse action (12 CFR 

1022.74(b)); 

3. when a person makes a firm offer of credit in a prescreened solicitation even if the 

person makes other firm offers of credit to other consumers on more favorable material 

terms (12 CFR 1022.74(c));

4. when a person generally provides a credit score disclosure to each consumer that 

requests a loan that is or will be secured by residential real property (12 CFR 

1022.74(d));

5. when a person generally provides a credit score disclosure to each consumer that 

requests a loan that is not or will not be secured by residential real property (12 CFR 

1022.74(e));

6. When a person who otherwise provides credit score disclosures to consumers that 

request loans, provides a disclosure about credit scores when no credit score is available 

(12 CFR 1022.74(f)).

The specific disclosure requirements for exceptions in Sections 1022.74(d)-(f) are described

below.

Section 1022.74(d) exception - credit score disclosure for loans secured by residential real

property. A person is not required to provide a risk-based pricing notice to a consumer under 

Sections 1022.72(a) or (c) if: 

1. The consumer requests from an person an extension of credit that is or will be secured 

by one to four units of residential real property; and 

2. The person generally provides to each consumer that requests such an extension of credit 

a notice that contains the following:

a. A statement that a consumer report (or credit report) is a record of the consumer’s 

credit history and includes information about whether the consumer pays his or her 

obligations on time and how much the consumer owes to creditors; 
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b. A statement that a credit score is a number that takes into account information in a 

consumer report and that a credit score can change over time to reflect changes in the 

consumer’s credit history;

c. A statement that the consumer’s credit score can affect whether the consumer can 

obtain credit and what the cost of that credit will be;

d. A statement that the consumer is encouraged to verify the accuracy of the 

information contained in the consumer report and has the right to dispute any 

inaccurate information in the report;

e. A statement that federal law gives the consumer the right to obtain copies of his or 

her consumer reports directly from the consumer reporting agencies, including a free 

report from each of the nationwide consumer reporting agencies once during any 12-

month period;

f. Contact information for the centralized source from which consumers may obtain 

their free annual consumer reports;

g. A statement directing consumers to the website of the CFPB to obtain more 

information about consumer reports; 

h. The information required to be disclosed to the consumer in Section 609(g) of the 

FCRA, and as described in Module 3 of these examination procedures, under 

“Disclosure of Credit Scores by Certain Mortgage Lenders (FCRA), Section 609(g);” 

and

i. The distribution of credit scores among consumers who are scored under the same 

scoring model that is used to generate the consumer’s credit score. The distribution 

must:

i. Use the same scale as that of the credit score provided to the consumer, and 

ii. Be presented:

• In the form of a bar graph containing a minimum of six bars that 

illustrates the percentage of consumers with credit scores within the range 

of scores reflected in each bar, 

• By other clear and readily understandable graphical means, or 

• In a clear and readily understandable statement informing the consumer 

how his or her credit score compares to the scores of other consumers. 

The presentation may use a graph or statement obtained from the entity providing 

the credit score if it meets these requirements.

Form of the notice. The Section 1022.74(d) notice must be:

1. Clear and conspicuous;

2. Provided on or with the notice required by Section 609(g) of the FCRA;

3. Segregated from other information provided to the consumer, except for the notice 

required by Section 609(g) of the FCRA; and
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4. Provided to the consumer in writing and in a form that the consumer may keep.

Timing. The Section 1022.74(d) notice must be provided to the consumer at the same time as 

the disclosure required by Section 609(g) of the FCRA is provided to the consumer, which must 

be provided as soon as reasonably practicable after the credit score has been obtained. In any 

event, the Section 1022.74(d) notice must be provided at or before consummation in the case of 

closed-end credit or before the first transaction is made under an open-end credit plan.

Content of the notice when using multiple credit scores. When a person obtains two or more 

credit scores from consumer reporting agencies in setting material terms of credit, the content of 

the Section 1022.74(d) notice varies depending upon whether the person only relies upon one of 

the credit scores or relies upon multiple credit scores. 

1. If a person only relies upon one of those credit scores in setting the material terms of 

credit granted, extended, or otherwise provided to a consumer (for example, by using 

the low, middle, high, or most recent score), the notice must include that credit score 

and the other information required by Section 1022.74(d). 

2. If a person relies upon multiple credit scores in setting the material terms of credit 

granted, extended, or otherwise provided to a consumer (for example, by computing 

the average of all the credit scores obtained), the notice must include one of those 

credit scores and the other information required by Section 1022.74(d). 

At the person’s option, the notice may include more than one credit score, along with the 

additional information required by Section 1022.74(d) for each credit score disclosed.

Examples:

1. A person uses consumer reports to set the material terms of mortgage credit granted, 

extended, or provided to consumers and regularly requests credit scores from several 

consumer reporting agencies. It relies upon the low score when determining the material 

terms it will offer to the consumer. The person must disclose the low score in the Section 

1022.74(d) notice.

2. A person uses consumer reports to set the material terms of mortgage credit granted, 

extended, or provided to consumers and regularly requests credit scores from several 

consumer reporting agencies. The person takes an average of all of the credit scores 

obtained in order to determine the material terms it will offer to the consumer, and thus 

relies upon all of the credit scores that it receives. The person may choose one of these 

scores to include in the Section 1022.74(d) notice.

Model form. Appendix H-3 of the regulation contains a model form of the Section 1022.74(d) 

notice that is consolidated with the notice required by Section 609(g) of the FCRA. While use of 

the model form is optional, appropriate use of Model Form H-3 is deemed to comply with the 

requirements of Section 1022.74(d). 

Section 1022.74(e) exception - credit score disclosure for loans not secured by residential real 

property. A person is not required to provide a risk-based pricing notice to a consumer under 

Section 1022.72(a) or (c) if:

1. The consumer requests from a person an extension of credit that is not or will not be 

secured by one to four units of residential real property; and 
Page 15 of 29

2. The person provides to each consumer that requests such an extension of credit a notice 

that contains the following:

a. A statement that a consumer report (or credit report) is a record of the consumer’s 

credit history and includes information about whether the consumer pays his or her 

obligations on time and how much the consumer owes to creditors;

b. A statement that a credit score is a number that takes into account information in a 

consumer report and that a credit score can change over time to reflect changes in the 

consumer’s credit history;

c. A statement that the consumer’s credit score can affect whether the consumer can 

obtain credit and what the cost of that credit will be;

d. A statement that the consumer is encouraged to verify the accuracy of the 

information contained in the consumer report and has the right to dispute any 

inaccurate information in the report;

e. A statement that federal law gives the consumer the right to obtain copies of his or 

her consumer reports directly from the consumer reporting agencies, including a free 

report from each of the nationwide consumer reporting agencies once during any 12-

month period;

f. Contact information for the centralized source from which consumers may obtain 

their free annual consumer reports; 

g. A statement directing consumers to the website of the CFPB to obtain more 

information about consumer reports;

h. The current credit score of the consumer or the most recent credit score of the 

consumer that was previously calculated by the consumer reporting agency for a 

purpose related to the extension of credit;

i. The distribution of credit scores among consumers who are scored under the same 

scoring model that is used to generate the consumer’s credit score. The distribution 

must:

i. Use the same scale as that of the credit score provided to the consumer, and 

ii. Be presented:

• in the form of a bar graph containing a minimum of six bars that 

illustrates the percentage of consumers with credit scores within the range 

of scores reflected in each bar, 

• by other clear and readily understandable graphical means, or 

• In a clear and readily understandable statement informing the consumer 

how his or her credit score compares to the scores of other consumers. 

The presentation may use a graph or statement obtained from the entity providing the 

credit score if it meets these requirements.

j. The range of possible credit scores under the model used to generate the credit score;
Page 16 of 29

k. The date on which the credit score was created; and

l. The name of the consumer reporting agency or other person that provided the credit 

score.

NOTE: Items a, b, c, d, e, f, g, and i for the Section 1022.74(e) notice are the same as 

items a, b, c, d, e, f, g, and i for the Section 1022.74(d) notice. 

Form of the notice. The Section 1022.74(e) notice must be:

a. Clear and conspicuous;

b. Segregated from other information provided to the consumer; and

c. Provided to the consumer in writing and in a form that the consumer may keep.

Timing. The Section 1022.74(e) notice generally must be provided to the consumer as soon 

as reasonably practicable after the credit score has been obtained, but in any event at or 

before consummation in the case of closed-end credit or before the first transaction is made 

under an open-end credit plan. The notice may alternatively be provided in the following 

manner:

a. For automobile lending transactions made through an auto dealer or other party that 

is unaffiliated with the person, such as a creditor, the person may provide a Section 

1022.74(e) notice in the time periods described above. Alternatively, the creditor

may arrange to have the auto dealer or other party provide a Section 1022.74(e) 

notice to the consumer on its behalf within these time periods and maintain 

reasonable policies and procedures to verify that the auto dealer provides the notice 

to the consumer within the applicable time periods. If the creditor arranges to have 

the auto dealer or other party provide a Section 1022.74(e) notice, the creditor 

complies if the consumer receives a notice containing a credit score obtained by the 

dealer, even if a different credit score is obtained and used by the creditor. 12 CFR

1022.73(c)(2).

b. For credit that is granted under an open-end credit plan to a consumer in person or 

by telephone for contemporaneous purchase of goods or services, the Section 

1022.74(e) notice may be provided at the earlier of:

i. The time of the first mailing to the consumer after the decision is made to 

approve the credit, such as in a mailing containing the account agreement or a 

credit card; or

ii. Within 30 days after the decision to approve the credit.

(12 CFR 1022.73(c)(3))

Multiple credit scores. When a person obtains two or more credit scores from consumer 

reporting agencies in setting material terms of credit, the content of the Section 1022.74(e) 

notice varies depending if the person relies upon only one of the credit scores or relies upon 

multiple credit scores. These disclosures requirements are the same as those for the Section 

1022.74(d) notices, as described previously.
Page 17 of 29

Model form. Appendix H-4 of the regulation contains a model form of the Section 

1022.74(e) notice. While use of the model form is optional, appropriate use of Model Form 

H-4 is deemed to comply with the requirements of Section 1022.74(e).
Page 18 of 29

Section 1022.74(f) exception - credit score not available. A person is not required to provide a riskbased pricing notice to a consumer under Section 1022.72(a) or (c) if the person:

1. Regularly obtains credit scores from a consumer reporting agency and provides credit 

score disclosures to consumers in accordance with Sections 1022.74(d) or (e), but a 

credit score is not available from the consumer reporting agency from which the person

regularly obtains credit scores for a consumer to whom the person grants, extends, or 

provides credit;

2. Does not obtain a credit score from another consumer reporting agency in connection 

with granting, extending, or providing credit to the consumer; and

3. Provides to the consumer a notice that contains the following:

a. A statement that a consumer report (or credit report) includes information about the 

consumer’s credit history and the type of information included in that history;

b. A statement that a credit score is a number that takes into account information in a 

consumer report and that a credit score can change over time in response to changes 

in the consumer’s credit history;

c. A statement that credit scores are important because consumers with higher credit 

scores generally obtain more favorable credit terms;

d. A statement that not having a credit score can affect whether the consumer can 

obtain credit and what the cost of that credit will be;

e. A statement that a credit score about the consumer was not available from a 

consumer reporting agency, which must be identified by name, generally due to 

insufficient information regarding the consumer’s credit history;

f. A statement that the consumer is encouraged to verify the accuracy of the 

information contained in the consumer report and has the right to dispute any 

inaccurate information in the consumer report;

g. A statement that federal law gives the consumer the right to obtain copies of his or 

her consumer reports directly from the consumer reporting agencies, including a free 

consumer report from each of the nationwide consumer reporting agencies once 

during any 12-month period;

h. The contact information for the centralized source from which consumers may obtain 

their free annual consumer reports; and 

i. A statement directing consumers to the website of the CFPB to obtain more 

information about consumer reports.

NOTE: Items b, f, g, h, and i for the Section 1022.74(f) notice are the same as items b, f, 

g, h, and i for the Sections 1022.74(d) and (e) notices.
Page 19 of 29

Example. A person, such as a creditor, uses consumer reports to set the material terms of 

non-mortgage credit granted, extended, or provided to consumers and regularly requests 

credit scores from a particular consumer reporting agency. As required by Section 

1022.74(e), the creditor provides those credit scores and additional information to 

consumers. The consumer reporting agency provides to the creditor a consumer report on a 

particular consumer that contains one trade line, but does not provide the creditor with a 

credit score on that consumer. If the creditor does not obtain a credit score from another

consumer reporting agency and, based in whole or in part on information in a consumer 

report, grants, extends, or provides credit to the consumer, the creditor may provide the 

Section 1022.74(f) notice. If, however, the creditor obtains a credit score from another 

consumer reporting agency, the creditor may not rely upon the Section 1022.74(f) exception, 

but must satisfy the requirements of Section 1022.74(e).

Form of the notice. The Section 1022.74(f) notice must be:

1. Clear and conspicuous;

2. Segregated from other information provided to the consumer; and

3. Provided to the consumer in writing and in a form that the consumer may keep.

Timing. The Section 1022.74(f) notice generally must be provided to the consumer as soon 

as reasonably practicable after the person has requested the credit score, but in any event not 

later than consummation of a transaction in the case of closed-end credit or when the first 

transaction is made under an open-end credit plan. The notice may alternatively be provided 

in the following manner:

1. For automobile lending transactions made through an auto dealer or other party that is 

unaffiliated with the person, such as a creditor, the creditor may provide a Section 

1022.74(f) notice in the time periods described above. Alternatively, the creditor may 

arrange to have the auto dealer or other party provide a Section 1022.74(f) notice to the 

consumer on its behalf within these time periods and maintain reasonable policies and 

procedures to verify that the auto dealer provides the notice to the consumer within the 

applicable time periods. 

2. For credit that is granted under an open-end credit plan to a consumer in person or 

by telephone for contemporaneous purchase of goods or services, the Section 

1022.74(f) notice may be provided at the earlier of:

a. The time of the first mailing to the consumer after the decision is made to 

approve the credit, such as in a mailing containing the account agreement or a 

credit card; or

b. Within 30 days after the decision to approve the credit (12 CFR 1022.73(c)(3)).

Model form. Appendix H-5 of the regulation contains a model form of the Section 

1022.74(f) notice. While use of the model form is optional, appropriate use of Model Form 

H-5 is deemed to comply with the requirements of Section 1022.74(f).

Rules of Construction (12 CFR 1022.75)
Page 20 of 29

The rules clarify that, in general, only one risk-based pricing notice or one credit score exception 

notice is required to be provided per credit extension (however, an account review would still be 

required, if applicable). 

In a transaction involving two or more consumers who are granted, extended, or otherwise provided 

credit, a person must provide a risk-based pricing notice to each consumer. If the consumers have 

the same address, and the notice does not include a credit score(s), a person may satisfy the 

requirements by providing a single notice addressed to both consumers. However, if a notice 

includes a credit score(s), the person must provide a separate notice to each consumer whether the 

consumers have the same address or not. Each separate notice that includes a credit score(s) must 

contain only the credit score(s) of the consumer to whom the notice is provided, and not the credit 

score(s) of the other consumer. Similarly, for credit score disclosure exception notices, whether the 

consumers have the same address or not, the person must provide a separate notice to each 

consumer and each separate notice that includes a credit score(s) must contain only the credit 

score(s) of the consumer to whom the notice is provided. 

A purchaser or assignee of a credit contract with a consumer is not subject to the risk-based pricing 

notice requirements.

Appendix H

Appendix H contains seven optional model forms that may be used to comply with the regulatory 

requirements. The seven model forms are:

1. H-1 Model form for risk-based pricing notice

2. H-2 Model form for account review risk-based pricing notice

3. H-3 Model form for credit score disclosure exception for credit secured by one to four 

units of residential real property

4. H-4 Model form for credit score disclosure exception for loans not secured by residential 

real property

5. H-5 Model form for credit score disclosure exception for loans where credit score is not 

available

6. H-6 Model form for risk-based pricing notice with credit score information

7. H-7 Model form for account review risk-based pricing notice with credit score information

Use of the model forms is not required. A person may change the forms by rearranging the format 

or by making technical modifications to the language of the forms. However, any change may not 

be so extensive as to materially affect the substance, clarity, comprehensibility, or meaningful 

sequence of the forms. Persons making such extensive revisions would lose the “safe harbor” that 

Appendix H provides. Examples of acceptable changes are provided in Appendix H to the 

regulation. 
Page 21 of 29

Fair Credit Reporting Act

Module 3

Adverse Action Disclosures - Sections 615(a) and (b); 15 U.S.C. § 1681m(a) and (b)

1. Determine whether the policies and procedures adequately ensure that the creditor or other 

person provides the appropriate disclosures, including the consumer’s credit score as 

appropriate, when it takes adverse action against consumers based in whole or in part on 

information contained in a consumer report or specified information received from third parties, 

including affiliates.

2. Review the policies and procedures of the creditor or other person for responding to requests for 

information in response to these adverse action notices.

3. If procedural weaknesses or other risks requiring further investigation are noted, review a 

sample of adverse action notices to determine if they are accurate and in technical compliance.
Page 22 of 29

Module 3

Risk-Based Pricing Notice - Section 615(h); 15 U.S.C. § 1681m(h); 12 CFR 1022 (Subpart H)

1. Determine whether the creditor (or other person) uses consumer report information in consumer 

credit decisions. 

If yes, determine whether the creditor uses such information to provide credit on terms that are 

“materially less favorable” than the most favorable material terms available to a substantial 

proportion of its consumers. Relevant factors in determining the significance of differences in 

the cost of credit include the type of credit product, the term of the credit extension, and the 

extent of the difference. 

If “yes,” the creditor is subject to the risk-based pricing regulations. 

2. Determine the method the creditor uses to identify consumers who must receive a risk-based 

pricing notice and whether the method complies with the regulation (12 CFR 1022.72(b)).

a. For creditors that use the direct comparison method (12 CFR 1022.72(b)), determine 

whether the creditor directly compares the material terms offered to each consumer and the 

material terms offer to other consumers for a specific type of credit product.

b. For creditors that use the credit score proxy method (12 CFR 1022.72(b)(1)):

i. determine whether the creditor calculates the cutoff score by considering the credit 

scores of all, or a representative sample, of consumers who have received credit for a 

specific type of credit product;

ii. determine whether the creditor recalculates the cutoff score no less than every two 

years;

iii. for new entrants into the credit business, for new products subject to risk-based 

pricing, or for acquired credit portfolios, determine whether the creditor recalculates 

the cutoff scores within time periods specified in the regulation;

iv. for creditors using more than one credit score to set material terms, determine 

whether the creditor establishes a cutoff score according to the methods specified in 

the regulation; and

v. if no credit score is available for a consumer, determine whether the creditor provides 

the consumer a risk-based pricing notice.

c. For creditors that use the tiered pricing method (12 CFR 1022.72(b)(2)):

i. when four or fewer pricing tiers are used, determine if the creditor sends risk-based 

pricing notices to consumers who do not qualify for the top, best-priced tier; or 

ii. when five or more pricing tiers are used, determine if the creditor provides risk-based 

pricing notices to consumers who do not qualify for the two top, best-priced tiers and any 

other tier that, combined with the top two tiers, equal no less than the top 30 percent and 

no more than the top 40 percent of the total number of tiers.

d. For credit card issuers:

i. determine whether the card issuer uses the direct comparison method, the credit score 

proxy method, or the tiered pricing method to identify consumers to whom it must 

provide a risk-based pricing notice. 

ii. if the card issuer does not use the direct comparison method, the credit score proxy 

method, or the tiered pricing method, determine whether the card issuer uses the 
Page 23 of 29

following method as permitted by 12 CFR 1022.72(c) to identify consumers to 

whom it must provide a risk-based pricing notice:

a) a consumer applies for a credit card either in connection with an application 

program, such as a direct-mail offer or a take-one application, or in response to a 

solicitation under 12 CFR 1026.60, and more than a single possible purchase 

annual percentage (APR) rate may apply under the program or solicitation; and 

b) based in whole or in part on a consumer report, the credit card issuer provides a 

credit card to the consumer with a purchase APR that is greater than the lowest 

purchase APR available in connection with the application or solicitation.

iii. determine whether the card issuer provides a risk-based pricing notice to each 

consumer that is provided a credit card with a purchase APR greater than the lowest 

purchase APR available under the program or solicitation.

3. Determine whether the creditor provides a risk-based pricing notice to a consumer (12 CFR 

1022.72(a)). For creditors that provide the notice, proceed to step #4. If the creditor does not 

provide a risk-based pricing notice, proceed to step #5 to determine whether an exception 

applies (12 CFR 1022.74). 

4. Determine whether the risk based pricing notice contains (12 CFR 1022.73(a)(1)):

a. a statement that a consumer report (or credit report) includes information about the 

consumer’s credit history and the type of information included in that history;

b. a statement that the terms offered, such as the APR, have been set based on information 

from a consumer report;

c. a statement that the terms offered may be less favorable than the terms offered to consumers 

with better credit histories;

d. a statement that the consumer is encouraged to verify the accuracy of the information 

contained in the consumer report and has the right to dispute any inaccurate information in 

the report;

e. the identity of each consumer reporting agency that furnished a consumer report used in the 

credit decision;

f. a statement that federal law gives the consumer the right to obtain a copy of a consumer 

report from the consumer reporting agency or agencies identified in the notice without 

charge for 60 days after receipt of the notice;

g. a statement informing the consumer how to obtain a consumer report from the consumer 

reporting agency or agencies identified in the notice and providing contact information 

(including a toll-free telephone number, where applicable) specified by the consumer 

reporting agency or agencies;

h. a statement directing consumers to the website of the Consumer Financial Protection Bureau

(CFPB) to obtain more information about consumer reports; and

i. if a credit score of the consumer to whom a person grants, extends, or otherwise provides 

credit is used in setting the material terms of credit:

i. a statement that a credit score is a number that takes into account information in a 

consumer report, that the consumer's credit score was used to set the terms of credit 

offered, and that a credit score can change over time to reflect changes in the 

consumer's credit history;

i. the credit score used by the person in making the credit decision;
Page 24 of 29

ii. the range of possible credit scores under the model used to generate the credit score;

iii. all of the key factors that adversely affected the credit score, which shall not exceed 

four key factors, except that if one of the key factors is the number of enquiries made 

with respect to the consumer report, the number of key factors shall not exceed five;

iv. the date on which the credit score was created; and

v. the name of the consumer reporting agency or other person that provided the credit 

score.

Proceed to step #10.

5. If the creditor does not provide a risk-based pricing notice, determine if one of the following 

situations that qualify for a regulatory exception applies (12 CFR 1022.74(a)-(f)):

a. a consumer applies for specific terms of credit, and receives them, unless those terms were 

specified by the creditor using a consumer report after the consumer applied for the credit 

and after the creditor obtained the consumer report; 

b. a creditor provides a notice of adverse action;

c. a creditor makes a firm offer of credit in a prescreened solicitation (even if the person makes 

other firm offers of credit to other consumers on more favorable material terms);

d. a creditor generally provides a credit score disclosure to each consumer that requests a loan 

that is or will be secured by residential real property (if so, proceed to step #6);

e. a creditor generally provides a credit score disclosure to each consumer that requests a loan 

that is not or will not be secured by residential real property (if so, proceed to step #7); or

f. a creditor, which otherwise provides credit score disclosures to consumers that request 

loans, provides a disclosure for when no credit score is available (if so, proceed to step #8).

6. For creditors that choose to provide a credit score disclosure to consumers that request a loan 

that is or will be secured by residential real property, determine whether the Section 1022.74(d) 

notice generally is provided to each consumer that requests such an extension of credit and that 

each notice contains:

a. a statement that a consumer report (or credit report) is a record of the consumer’s credit 

history and includes information about whether the consumer pays his or her obligations on 

time and how much the consumer owes to creditors; 

b. a statement that a credit score is a number that takes into account information in a consumer 

report and that a credit score can change over time to reflect changes in the consumer’s 

credit history;

c. a statement that the consumer’s credit score can affect whether the consumer can obtain 

credit and what the cost of that credit will be;

d. a statement that the consumer is encouraged to verify the accuracy of the information 

contained in the consumer report and has the right to dispute any inaccurate information in 

the report;

e. a statement that federal law gives the consumer the right to obtain copies of his or her 

consumer reports directly from the consumer reporting agencies, including a free report 

from each of the nationwide consumer reporting agencies once during any 12-month period;
Page 25 of 29

f. contact information for the centralized source from which consumers may obtain their free 

annual consumer reports; 

g. a statement directing consumers to the website of the CFPB to obtain more information 

about consumer reports; 

h. the information required to be disclosed to the consumer in Section 609(g) of the FCRA, and 

as described in Module 3 of these examination procedures, under “Disclosure of Credit 

Scores by Certain Mortgage Lenders (FCRA), Section 609(g)”; and

i. the distribution of credit scores among consumers who are scored under the same scoring 

model that is used to generate the consumer’s credit score. The distribution must:

i. use the same scale as that of the credit score provided to the consumer, and 

ii. be presented:

a) in the form of a bar graph containing a minimum of six bars that illustrates the 

percentage of consumers with credit scores within the range of scores reflected in 

each bar, 

b) by other clear and readily understandable graphical means, or 

c) in a clear and readily understandable statement informing the consumer how his or 

her credit score compares to the scores of other consumers. 

The presentation may use a graph or statement obtained from the entity providing the credit 

score if it meets these requirements.

7. For creditors that choose to provide a credit score disclosure to consumers that request a loan 

that is not or will not be secured by residential real property, determine whether the Section 

1022.74(e) notice generally is provided to each consumer that requests such an extension of 

credit and that each notice contains:

a. a statement that a consumer report (or credit report) is a record of the consumer’s credit 

history and includes information about whether the consumer pays his or her obligations on 

time and how much the consumer owes to creditors;

b. a statement that a credit score is a number that takes into account information in a consumer 

report and that a credit score can change over time to reflect changes in the consumer’s 

credit history;

c. a statement that the consumer’s credit score can affect whether the consumer can obtain 

credit and what the cost of that credit will be;

d. a statement that the consumer is encouraged to verify the accuracy of the information 

contained in the consumer report and has the right to dispute any inaccurate information in 

the report;

e. a statement that federal law gives the consumer the right to obtain copies of his or her 

consumer reports directly from the consumer reporting agencies, including a free report 

from each of the nationwide consumer reporting agencies once during any 12-month period;

f. contact information for the centralized source from which consumers may obtain their free 

annual consumer reports; 

g. a statement directing consumers to the website of CFPB to obtain more information about 

consumer reports;

h. the current credit score of the consumer or the most recent credit score of the consumer that 

was previously calculated by the consumer reporting agency for a purpose related to the 

extension of credit;
Page 26 of 29

i. the distribution of credit scores among consumers who are scored under the same scoring 

model that is used to generate the consumer’s credit score. The distribution must:

i. use the same scale as that of the credit score provided to the consumer, and 

ii. be presented:

a) in the form of a bar graph containing a minimum of six bars that illustrates the 

percentage of consumers with credit scores within the range of scores reflected in 

each bar, 

b) by other clear and readily understandable graphical means, or 

c) in a clear and readily understandable statement informing the consumer how his or 

her credit score compares to the scores of other consumers. 

The presentation may use a graph or statement obtained from the entity providing the credit 

score if it meets these requirements;

j. the range of possible credit scores under the model used to generate the credit score;

k. the date on which the credit score was created; and

l. the name of the consumer reporting agency or other person that provided the credit score.

8. For creditors that otherwise provide credit score disclosures to consumers that request loans, 

determine whether the Section 1022.74(f) notice is provided to the applicable consumers in 

situations where no credit score is available for the consumer, as required by 1022.74(f). 

Determine whether each notice contains:

a. a statement that a consumer report (or credit report) includes information about the 

consumer’s credit history and the type of information included in that history;

b. a statement that a credit score is a number that takes into account information in a consumer 

report and that a credit score can change over time in response to changes in the consumer’s 

credit history;

c. a statement that credit scores are important because consumers with higher credit scores 

generally obtain more favorable credit terms;

d. a statement that not having a credit score can affect whether the consumer can obtain credit 

and what the cost of that credit will be;

e. a statement that a credit score about the consumer was not available from a consumer 

reporting agency, which must be identified by name, generally due to insufficient 

information regarding the consumer’s credit history;

f. a statement that the consumer is encouraged to verify the accuracy of the information 

contained in the consumer report and has the right to dispute any inaccurate information in 

the consumer report;

g. a statement that federal law gives the consumer the right to obtain copies of his or her 

consumer reports directly from the consumer reporting agencies, including a free consumer 

report from each of the nationwide consumer reporting agencies once during any 12-month 

period;

h. the contact information for the centralized source from which consumers may obtain their 

free annual consumer reports; and 

i. a statement directing consumers to the website of the CFPB to obtain more information 

about consumer reports.
Page 27 of 29

9. For creditors that provide credit score exception notices and that obtain multiple credit scores in 

setting material terms of credit, determine whether the score(s) is disclosed in a manner 

consistent with the regulation (12 CFR 1022.74(d)(4) and .74(e)(4)):

a. if a creditor only relies upon one of those credit scores in setting the material terms of credit 

granted, extended, or otherwise provided to a consumer (for example, by using the low, 

middle, high, or most recent score), determine whether the notice includes that credit score 

and the other information required by Section 1022.74(d). 

b. if a creditor relies upon multiple credit scores in setting the material terms of credit granted, 

extended, or otherwise provided to a consumer (for example, by computing the average of 

all the credit scores obtained), determine whether the notice includes one of those credit 

scores and the other information required by Section 1022.74(d). 

10. Regardless of whether the creditor provides risk-based pricing notices or credit score exception 

notices, if the creditor increases the consumer’s APR as the result of a review of a consumer’s 

account, determine whether the creditor provided the consumer with an account review riskbased pricing notice (12 CFR 1022.72(d)) if an adverse action notice was not already provided.

11. Determine whether the account review risk-based pricing notice contains (12 CFR 

1022.73(a)(2)):

a. a statement that a consumer report (or credit report) includes information about the 

consumer’s credit history and the type of information included in that history;

b. a statement that the consumer is encouraged to verify the accuracy of the information 

contained in the consumer report and has the right to dispute any inaccurate information in 

the report;

c. the identity of each consumer reporting agency that furnished a consumer report used in the 

credit decision;

d. a statement that federal law gives the consumer the right to obtain a copy of a consumer 

report from the consumer reporting agency or agencies identified in the notice without 

charge for 60 days after receipt of the notice;

e. a statement that informs the consumer how to obtain a consumer report from the consumer 

reporting agency or agencies identified in the notice and provides contact information (including 

a toll-free telephone number, where applicable) specified by the consumer reporting agency or 

agencies; 

f. a statement that directs consumers to the website of the CFPB to obtain more information 

about consumer reports;

g. a statement that the creditor has conducted a review of the account using information from a 

consumer report; 

h. a statement that, as a result of the review, the APR on the account has been increased based 

on information from a consumer report; and

i. if a credit score of the consumer whose extension of credit is under review is used in 

increasing the APR:

i. a statement that a credit score is a number that takes into account information in a 

consumer report, that the consumer's credit score was used to set the terms of credit 

offered, and that a credit score can change over time to reflect changes in the 

consumer's credit history;

ii. the credit score used by the person in making the credit decision;
Page 28 of 29

iii. the range of possible credit scores under the model used to generate the credit score;

iv. all of the key factors that adversely affected the credit score, which shall not exceed 

four key factors, except that if one of the key factors is the number of enquiries made 

with respect to the consumer report, the number of key factors shall not exceed five;

v. the date on which the credit score was created; and

vi. the name of the consumer reporting agency or other person that provided the credit 

score.

12. For all notices, determine whether the notices are clear and conspicuous and comply with the 

specific format requirements for the notices (12 CFR 1022.73(b), .74(d)(2), .74(e)(2), and 

.74(f)(3)).

13. For all notices, determine whether the notices are provided within the required time frames (12 

CFR 1022.73(c), .74(d)(3), .74(e)(3), and .74(f)(4)), as set out as follows:

Risk-based pricing notices and account review risk-based pricing notices

• For closed-end credit, the notice generally must be provided to the consumer after the 

decision to approve a credit request is communicated to the consumer, but before 

consummation of the transaction. 

• For open-end credit, the notice generally must be provided after the decision to grant credit 

is communicated to the consumer, but before the first transaction under the plan has been 

made.

• For account reviews, the notice generally must be provided at the time that the decision to 

increase the APR is communicated to the consumer or no later than five days after the 

effective date of the change in the APR. 

Credit score disclosures for loans secured by residential real property

• The credit score disclosure for loans secured by residential real property must be provided to 

the consumer at the same time as the disclosure required by Section 609(g) of the FCRA is 

provided to the consumer. The 609(g) notice must be provided as soon as reasonably 

practicable after the credit score has been obtained. In any event, the credit score disclosure 

for loans secured by residential real property must be provided at or before consummation in 

the case of closed-end credit or before the first transaction is made under an open-end credit 

plan.

Credit score disclosures for loans not secured by residential real property 

• The notice generally must be provided to the consumer as soon as reasonably practicable 

after the credit score has been obtained, but in any event at or before consummation in the 

case of closed-end credit or before the first transaction is made under an open-end credit 

plan. 

Credit score exception notices when no credit score is available

• The notice generally must be provided to the consumer as soon as reasonably practicable 

after the creditor has requested the credit score, but in any event not later than 

consummation of a transaction in the case of closed-end credit or when the first transaction 

is made under an open-end credit plan.
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Application to certain automobile lending transactions

• For automobile lending transactions made through an auto dealer that is unaffiliated with the 

creditor, the creditor may provide a notice in the time periods described above. 

Alternatively, the creditor may arrange to have the auto dealer provide a notice to the 

consumer on its behalf within these time periods and maintain reasonable policies and 

procedures to verify that the auto dealer provides the notice to the consumer within the 

applicable time periods. If the creditor arranges to have the auto dealer provide a credit score 

disclosure for loans not secured by residential real property, the creditor complies if the 

consumer receives a notice containing a credit score obtained by the dealer with these time 

periods, even if a different credit score is obtained and used by the creditor. 

• For credit that is granted under an open-end credit plan to a consumer in person or by 

telephone for contemporaneous purchase of goods or services, the notice may be provided at 

the earlier of:

o the time of the first mailing to the consumer after the decision is made to approve the 

credit, such as in a mailing containing the account agreement or a credit card; or

o within 30 days after the decision to approve the credit.

14. For all notices, determine whether the creditor follows the rules of construction pertaining to the 

number of notices provided to the consumer(s) (12 CFR 1022.75). In a transaction involving 

two or more consumers, a creditor must provide a risk-based notice to each consumer. If the 

consumers have the same address, and the notice does not include a credit score(s), a person 

may satisfy the requirements by providing a single notice addressed to both consumers. 

However, if a notice includes a credit score(s), the person must provide a separate notice to each 

consumer whether the consumers have the same address or not. Each separate notice that 

includes a credit score(s) must contain only the credit score(s) of the consumer to whom the 

notice is provided, and not the credit score(s) of the other consumer. Similarly, for credit score 

disclosure exception notices, whether the consumers have the same address or not, the creditor

must provide a separate notice to each consumer and each separate notice that includes a credit 

score(s) must contain only the credit score(s) of the consumer to whom the notices is provided. 

15. For all notices, determine whether the creditor uses the model forms in Appendix H of the 

regulation. If yes, determine that it does not modify the model form so extensively as to affect 

the substance, clarity, comprehensibility, or meaningful sequence of the forms (Appendix H).