Risk-Based Pricing

Posted By: MBTCompliance

Risk-Based Pricing - 08/09/19 01:36 PM

What regulations must we consider for risk-based pricing, i.e. credit score 1 gets interest rate A, credit score 2 gets interest rate B, etc.?
Posted By: rlcarey

Re: Risk-Based Pricing - 08/09/19 01:51 PM

Regulation V - Subpart H—Duties of Users Regarding Risk-Based Pricing
Posted By: Richard Insley

Re: Risk-Based Pricing - 08/09/19 06:21 PM

Any time you're dealing with pricing of consumer credit, you should also keep the various non-discrimination prohibitions and UDAAP in mind. Reg. V tells you what to disclose when you have made a credit decision to extend credit on materially less favorable terms. It doesn't address the problem of arriving at your decision in an unfair or discriminatory manner. Let's say it's your practice to pull CBRs on all consumer credit applications--including applications secured by CDs or other cash-like collateral. In these cases, you didn't need the CBR because there is no risk, so any pricing differential becomes suspicious.
Posted By: MBTCompliance

Re: Risk-Based Pricing - 08/09/19 07:10 PM

Thank you.