Beginning in 2011 (no, not 2010), consumers will be notified if they receive less favorable terms on their mortgages because of credit imperfections, according to a notice from the Federal Reserve and FTC.
Consumers with less-than-stellar credit will receive “risk-based pricing” notices when applying for mortgages and other types of loans, assuming their credit scores adversely affect the terms and/or interest rate they ultimately receive.
“The risk-based pricing notice requirement is designed primarily to improve the accuracy of consumer reports by alerting consumers to the existence of negative information on their consumer reports so that consumers can, if they choose, check their consumer reports for accuracy and correct any inaccurate information.”
Consumers who receive a “risk-based pricing” notice will also be able to obtain a free credit report to ensure the information is accurate.
The final rules regarding the matter allow creditors to implement several methods to determine which consumers must receive risk-based pricing notices.
For example, creditors will be permitted to provide consumers with a free credit score and information about their score as an alternative to providing the risk-based pricing notices.
It’s recommended that you check your credit report months before applying for a mortgage to ensure information is accurate and also sufficient to obtain financing.