The scoop on risk-based pricing

In several recent internal audit loan reviews, there’s been some confusion regarding Regulation V’s Subpart H risk-based pricing notices and credit score disclosure exception notices. Here’s the scoop to stay in compliance:

  • If your credit union uses a consumer credit report in connection with an application for credit to a member primarily for personal, family, or household purposes and—based in whole or in part on the credit report—grants credit on material terms less favorable than the most favorable terms for a proportion of members, you are using risk-based pricing. You’ll need to provide proper notice to members who receive less favorable terms (§1022.70).
  • A credit union can provide a credit score disclosure exception notice in lieu of the risked-based pricing notice. The notice must contain specific information on a member’s credit score (§1022.74(d)) and (§1022.74(e)).
  • Model forms for credit score disclosure exception notices can be found in appendices H-3 (loans secured by residential real property) and H-4 (loans not secured) (§1022.74(d)) and (§1022.74(e)). Those for risk-based pricing notices are contained in appendices H-1, H-2, and H-6 (§1022.73(b)(2)).
  • Credit unions should contact their forms vendor or credit bureau representative to confirm they’re using proper forms and correct information.
Rita Fillingane

Rita Fillingane

Rita Fillingane ( or 909-212-6055) is vice president of research and collaboration for the California and Nevada Credit Union Leagues. She has worked in various capacities at the ... Web: Details