Vehicle dealers are now required to alert consumers when their credit scores affect the terms of their purchases.
Under Section 311 of the Fair and Accurate Credit Transactions Act of 2003, the practice of “risk-based pricing” – charging different customers different rates based on their credit reports – requires creditors to issue a Risk-Based Pricing Notice for credit applicants whenever their credit scores trigger higher interest rates or other adverse terms.
The notice must be provided to all customers who apply for credit, not just those customers affected by risk-based pricing. In addition to containing the consumer’s credit score, the notice also must include the date the score was created and the source of the score. Consumers are also provided with a range of scores, information on how lenders use their scores and a written description or chart showing how the applicant ranks against other consumers.