What action must be taken if a credit score is used in a negative decision?

The correct response relates to the necessity of a risk-based pricing notice. When a credit score is utilized in a decision that negatively impacts a consumer, such as in lending, it is essential for the lender to provide clear communication about how the consumer's credit score influenced that decision.

The Fair Credit Reporting Act (FCRA) mandates that consumers must be informed if a credit score is a factor in adverse actions taken against them, which includes the requirement of sending a risk-based pricing notice. This notice not only informs the consumer that their credit score was used but also provides them with educational information regarding what that score means and how it impacts their eligibility for credit.

This requirement is designed to promote transparency in lending practices and help consumers understand their financial scenarios better. It helps ensure that consumers are aware of the information influencing financial decisions made by credit grantors, allowing them to take steps to improve their situation if needed.