How to Complete and Deliver the Risk-Based Pricing Notice Model Form

The risk-based pricing notice model forms live in Appendix H of Regulation V (12 CFR Part 1022), and choosing the right one comes down to three questions: is this a new credit decision or a review of an existing account, did a credit score drive the pricing, and are you using the credit score disclosure exception instead of the standard notice? Answer those three, and one of the seven forms (H-1 through H-7) is your form. Use it unmodified, fill in the bracketed fields from the consumer report, and deliver it after you communicate approval but before the loan consummates or the first open-end transaction posts.

Pick the Form That Matches Your Transaction

Appendix H splits into two groups. Four forms are risk-based pricing notices proper. Three are credit score disclosure exception notices, which a lender uses when it decides to send a disclosure to every applicant for a product rather than identify individual borrowers who received less favorable terms.1Consumer Financial Protection Bureau. Appendix H to Part 1022 – Model Forms for Risk-Based Pricing and Credit Score Disclosure Exception Notices The two groups are not interchangeable.

Risk-Based Pricing Notices

  • H-1 — new credit decision, no credit score used in setting the material terms.
  • H-2 — account review resulting in an APR increase based on a consumer report, no credit score used.
  • H-6 — new credit decision where a credit score was used in setting the material terms. Includes fields for the score, score range, and key factors.
  • H-7 — account review resulting in an APR increase where a credit score was used.

Credit Score Disclosure Exception Notices

  • H-3 — credit secured by one to four units of residential real property. This form also satisfies the separate disclosure required by Section 609(g) of the FCRA for mortgage transactions.
  • H-4 — credit not secured by residential real property.
  • H-5 — situations where no credit score is available for the consumer.
2eCFR. 12 CFR Part 1022 Subpart H – Duties of Users Regarding Risk-Based Pricing

The exception route is popular because it removes the sorting problem. Instead of running a credit score proxy calculation or maintaining tier records to identify which borrowers received less favorable terms, you send an exception notice to every applicant for the product. The tradeoff is volume: more notices go out, but each is standardized and the compliance question narrows to whether the form was completed accurately.3Federal Trade Commission. Using Consumer Reports for Credit Decisions: What to Know About Adverse Action and Risk-Based Pricing Notices

Completing the Fields

The model forms are templates; the underlying content requirements sit in 12 CFR § 1022.73. Every risk-based pricing notice for a new credit decision must contain:

  • A statement that a consumer report includes information about the consumer’s credit history and the type of information in that history.
  • A statement that the terms offered, such as the APR, were set based on information from a consumer report.
  • A statement that the terms offered may be less favorable than those offered to consumers with better credit histories.
  • A statement encouraging the consumer to verify the accuracy of the report and informing them of the right to dispute inaccurate information.
  • The name of each consumer reporting agency that furnished a report used in the decision, along with the agency’s contact information including a toll-free telephone number.
  • A statement that federal law entitles the consumer to a free copy of the report from the identified agency within 60 days of receiving the notice.
  • A statement directing the consumer to the CFPB’s website for more information about consumer reports.
4eCFR. 12 CFR 1022.73 – Content, Form, and Timing of Risk-Based Pricing Notices

When a credit score was used in setting the material terms (Forms H-6 and H-7), five additional fields appear on the form and must be completed:

  • The actual numerical credit score used in the decision.
  • The full range of possible scores under the scoring model used.
  • Up to four key factors that most negatively affected the score. If the number of recent inquiries is one of those factors, up to five factors are permitted.
  • The date the score was generated.
  • The name of the agency or entity that provided the score.
4eCFR. 12 CFR 1022.73 – Content, Form, and Timing of Risk-Based Pricing Notices

Account review notices (H-2 and H-7) mirror this structure but replace the new-credit statements with language about the account review and the APR increase. Pull each entry from the consumer report and the underwriting decision, and verify each field against the source before the notice leaves.

The exception forms carry different content. Form H-3 for residential mortgage credit requires the consumer’s credit score, a graphical comparison showing how the score ranks against other consumers scored under the same model (a bar graph with at least six bars or an equivalent clear statement), information about free annual reports, and CFPB contact information. Form H-4 mirrors H-3 for non-mortgage credit. Form H-5 handles the no-score situation.5eCFR. 12 CFR 1022.74 – Exceptions

When to Send It

Timing is tight and depends on the credit type. For closed-end credit, the notice must reach the consumer before consummation of the transaction, but no earlier than when the approval decision is communicated. For open-end credit, it must reach the consumer before the first transaction under the plan, again no earlier than the approval communication.6Consumer Financial Protection Bureau. 12 CFR 1022.73 – Content, Form, and Timing of Risk-Based Pricing Notices

The window opens at approval and closes at consummation (or first use). Most lenders build the notice into the same workflow as the approval letter so both documents go out together. For an account review notice, the same principle applies: the notice must reach the consumer before the increased APR takes effect.

Paper mail is fine. Electronic delivery is permitted if the consumer has affirmatively consented under the E-Sign Act and has not withdrawn that consent.7National Credit Union Administration. Electronic Signatures in Global and National Commerce Act (E-Sign Act)

Why Use the Model Form Unmodified

Using any of the Appendix H forms is optional. A lender may design its own notice, provided it meets every content, form, and timing requirement in Regulation V. But using an Appendix H form, or modifying one without materially changing its substance, clarity, or meaningful sequence, produces a safe harbor: the lender is deemed compliant with the applicable section of the regulation.1Consumer Financial Protection Bureau. Appendix H to Part 1022 – Model Forms for Risk-Based Pricing and Credit Score Disclosure Exception Notices That protection is the practical reason most lenders start with the model rather than draft from scratch. Common compliance failures include sending the wrong form for the transaction type, omitting key factors from the credit score disclosure, and missing the delivery window between approval and consummation.8Consumer Financial Protection Bureau. Fair Credit Reporting Act (FCRA) Examination Procedures

Confirm the Notice Is Actually Owed

Before completing any form, verify that this transaction triggers the risk-based pricing rule at all. Two conditions must occur together: the lender pulled a consumer report in connection with the credit application or extension, and the lender then offered terms materially less favorable than the best terms available to a substantial proportion of its other consumers. “Material terms” almost always means the APR; where no APR exists, the term with the biggest financial impact on the consumer stands in.

Boundaries worth knowing:

Once the notice is owed, the form choice follows from the three questions at the top of this article. Match the form, fill the fields from the consumer report, verify each entry, and deliver it inside the window between approval and consummation.