Get Risk Based Pricing Notice

A consumer applies to the credit card issuer for a credit card. The card issuer obtains a credit score for the consumer. The consumer's credit score is 700. Since the consumer's 700 credit score falls below the 720 cutoff score, the credit card issuer must provide a risk-based pricing notice to the consumer.

Risk-based pricing is a method that lenders use to determine interest rates and other loan and credit card terms based on the applicant's creditworthiness. Credit scores are the primary way lenders can evaluate your creditworthiness, but they may also consider other factors.

Risk-based pricing is a practice adopted by some mortgage lenders that offers different interest rates or other loan terms to consumers based on the estimated risk that they will fail to repay their loans.

Risk-based pricing is criticized by some as a predatory practice. Instead of denying credit to people who don't qualify and shouldn't borrow, lenders can just charge extremely high prices. Unsophisticated borrowers don't know that they have bad credit, and they don't know what it costs them.

Risk-based pricing is a method that lenders use to determine interest rates and other loan and credit card terms based on the applicant's creditworthiness. Credit scores are the primary way lenders can evaluate your creditworthiness, but they may also consider other factors.

Under this system, costs are lowered for the majority of consumers who are deemed low risk, while credit opportunities are expanded for higher-risk consumers. Risk-based pricing also creates a fairer marketplace.

Risk-based pricing methodologies allow lenders to use credit profile characteristics to charge borrowers interest rates that vary by credit quality. Thus, not all borrowers for a single product will receive the same interest rate and credit terms.