Adverse Action Letter / Adverse Action Notice / Denied Credit

Adverse Action Letter | Adverse Action Notice | DeniedAn Adverse Action Letter (a.k.a Adverse Action Notice) is a letter sent to you after your application for credit, loan, employment etc. has been denied.

Under the Equal Credit Opportunity Act (ECOA), when creditors/insurers/employers denies your application for credit, insurance or employment based on your credit information, they are required to send an adverse action notice letting you know:

  • The reason(s) you were denied.
  • The name, address and phone number of the credit bureau that provided the information.






Creditors/Insurers/Employers MUST send you the adverse action letter within “reasonable amount of time”, which usually means 10 business days. Usually the adverse action notice is sent by mail, but in some cases it may be delivered orally or by phone.

Denied Credit Free Report
You have 60 days from the time you received the adverse action notice to ask for an additional free credit report from the credit bureau listed in the notice.

You can request free credit report only from the credit bureau listed in the letter. For example, if a lender used Equifax credit report to deny your application, you can only order a free Equifax credit report.

Once you get the copy of your credit report, review it to make sure that the decision wasn’t made because of incorrect or inaccurate information. If you do find mistakes on your credit report, dispute them with the credit bureaus and request that an updated copy of your credit report be sent to the lender.

Note that the company, not the credit bureau, made the decision not to lend. You may be able to resubmit your application once your credit report has been corrected.

No Free Credit Report When Credit’s Not a Factor
You can only order the additional free credit report when the information in your credit report was the reason you were denied.

For example, your mortgage application may be denied because of insufficient income. In that case you are NOT entitled for an additional credit report.

In such case you’ll still receive an adverse action notice. It will list the specific reason(s) your application was denied, but won’t include any credit bureau name or allow you to receive a free credit report.

You Still Get an Annual Credit Report
The credit report you get when you’re denied credit is an extra credit report and doesn’t have an impact on the free annual credit report that you can order once a year from all three credit bureaus.

What other information is included in the notice?
Any adverse action letter must include the following:

  • An Equal Credit Opportunity Act (ECOA) notice at the end of it, stating it’s illegal to deny your application based on race, color, religion, national origin, sex, marital status, age (as long as you’re old enough to sign a contract), participation in public assistance program, or exercising your Consumer Credit Protection Act rights.
  • A statement letting you know you can obtain your credit report free from the agency listed in the notice within 60 days.
  • A statement clarifying that the credit bureau wasn’t involved in the decision to decline your application, and that the bureau can’t tell you why your application was denied (Those reasons will be listed in the notice).
  • A disclosure of your right to dispute inaccurate or incomplete credit report information.









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