Upfront pricing refers to the interest rates and limits established for a borrower in a credit card’s underwriting and issuance. In credit card underwriting, a creditor will use automated technology to establish all of the pricing terms at the onset of the relationship. The details of a borrower’s upfront pricing terms are included in their credit agreement. Upfront pricing terms are generated from customized risk-based pricing methodologies which take into account a borrower’s credit profile and debt-to-income. Using these inputs the creditor will establish credit card pricing terms upfront for the credit agreement. Pricing terms generally focus on the borrower’s interest rate and credit limit.
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