Under what circumstances is a risk-based pricing notice required to be provided?

A risk-based pricing notice is required when a consumer report directly affects the material terms of the credit extended. This notification is a crucial aspect of compliance with the Fair Credit Reporting Act (FCRA), specifically intended to ensure transparency in the lending process. When a lender bases its credit decision, including the interest rate or other loan terms, on information from a consumer's credit report, it must inform the consumer. This notice helps consumers understand why they may be receiving different terms and provides them with the opportunity to review their credit report for inaccuracies.

The other options do not align with the requirements for issuing a risk-based pricing notice. Verifying a consumer's income, for instance, does not trigger this requirement since it doesn't involve a detrimental adjustment based on creditworthiness. Similarly, a loan application completed without a credit score does not necessitate a risk-based pricing notice, as there is no reference to a consumer report that influenced the terms of credit. Lastly, the requirement is not limited only to mortgage loans, as it applies across various types of credit products when a consumer's credit history affects the material terms of their loan.