What type of notice is required if the material terms of credit offered are worse than those for better credit profiles?

The correct answer is the Risk Based Pricing Notice. This notice is required when a lender offers credit terms that are less favorable than those available to other borrowers with better credit profiles. Under the Fair Credit Reporting Act (FCRA), when a consumer receives less favorable terms, the lender must provide this notice to inform the borrower of the reasons why the specific terms offered differ from those extended to other consumers based on their creditworthiness.

This notice plays a crucial role in consumer transparency and awareness, helping consumers understand how their credit score and history influence the credit terms they are offered. Providing this notice empowers consumers to be aware of their credit standing and encourages them to take action if needed—such as improving their credit score.

The other options are specific types of notices related to credit but serve different purposes. An Adverse Action Notice is required when an application for credit is denied or when the terms offered are significantly less favorable than what the consumer applied for, but it does not specifically relate to comparative credit profiles. A Credit Application Notice usually pertains to disclosures made during the application process, while a Disclosure Statement outlines the terms of a credit offer without necessarily comparing them to those offered to other consumers.