Risk-based pricing is a methodology adopted by many lenders in the mortgage and financial services industries. It has been in use for many years as lenders try to measure loan risk in terms of interest rates and other fees. The interest rate on a loan is determined not only by the time value of money, but also by the lender's estimate of the probability that the borrower will default on the loan. A borrower who the lender thinks is less likely to default will be offered a better (lower) interest rate. This means that different borrowers will pay different rates.

The lender may consider a variety of factors in assessing the probability of default. These factors might be characteristics of the individual borrower, like the borrower's credit score or employment status. These factors might also be characteristics of the loan; for example, a mortgage lender might offer different rates to the same borrower, depending on whether that borrower wished to buy a single-family house or a condominium.

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Mon Feb 8 09:59:31 2010

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Summer 1999 Volume 1 Issue 2 Risk Based Pricing Are There Fair Lending Implications By James H Carr Technological advances combined with increasingly sophisticated analytical tools are transforming

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Wholesale Lender

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Business Information Systems Analysis Design Practice Pearson Publications Company

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Mizuho strengthens capital, raises $5.50 billion - FinanceAsia
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Mizuho strengthens capital, raises $5.50 billion

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A Japanese stock market analyst expressed frustration at the predictable pattern in Japan, whereby issuers are sold short in the run-up to the pricing of ...



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We are holding to our pricing and underwriting disciplines on risk business. Customers and prospects are showing mounting interest in our ability to ...



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From Google News Search: "Risk-based pricing"
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Credit Union Register: Fair credit reporting risk - based pricing ...
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Fri, 15 Jan 2010 16:27:00 GM

Fair credit reporting . risk. -. based pricing. final rules; Federal Reserve Board and Federal Trade Commission. 01/15/10: Fair Credit Reporting . Risk. -. Based Pricing. Regulations. Final rules. Federal Reserve Board, Federal Trade Commission. ...

New Risk - Based Pricing Requirements
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New Risk - Based Pricing Requirements

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Wed, 23 Dec 2009 01:06:36 GM

is given a loan on less favorable terms than provided to other borrowers. The rules take effect next year. The rules impact the practice of . risk. -. based pricing. , where lenders base the . pricing. on the creditworthines​s of the borrower. ...

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Changes For Credit Card Users

unknown

Sat, 23 Jan 2010 15:55:50 GM

The dirty little secret of what card issuers called . risk. -. based pricing. was that some of the best prices were offered to some of the riskiest customers. The trick was that they knew they could profit by offering lucrative deals to ...

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