Final answer:
It is not necessary to provide a risk-based pricing notice when a lender decreases a consumer's rate based on their credit report, as the notice is typically required for less favorable credit terms.
Step-by-step explanation:
Risk-Based Pricing Notice Requirements
According to the guidelines, it is not necessary to provide a risk-based pricing notice in certain situations. Specifically, a notice is not required when a lender decreases a consumer's rate based on a credit report. This can occur, for example, if the lender is offering more favorable terms due to the borrower's improved creditworthiness.
Thus, in answer to the student's question, the correct choice is (b) When a lender decreases a consumer's rate based on a credit report.
This exception is based on the premise that the notice is generally intended to inform consumers when they receive less favorable credit terms based on their credit information. If the terms are more favorable, the rationale for the notice does not apply.
A risk-based pricing notice is not necessary after the loan is approved. This is because the purpose of a risk-based pricing notice is to inform borrowers of the potential risks associated with their loan and any pricing adjustments based on those risks. Once the loan is approved, the borrower has already been informed and agreed to the terms and conditions of the loan.