Adverse Action Credit Notice: Deadlines, Contents, and Next Steps

An adverse action credit notice is the letter or electronic message a lender must send you when it denies your application, closes your account, cuts your credit limit, or raises your rate based at least partly on your credit report or credit score. Federal law gives the creditor 30 days from a completed application to send it, and the notice must tell you what was decided, the specific reasons why, and how to check the information behind the decision. It is both an explanation and a set of tools you can use to challenge the outcome.¹

Two laws sit behind the notice. The Equal Credit Opportunity Act (ECOA) covers credit decisions, including denials, account closures, rate increases, and refusals to raise a credit limit when the change does not apply across all accounts of that type. The Fair Credit Reporting Act (FCRA) reaches any negative decision that used a consumer report, credit or otherwise.²³

What Your Notice Must Include

When the decision drew on a consumer report, the FCRA requires the notice to state the decision itself, the name, address, and phone number of the credit reporting agency that supplied the report (including a toll-free number for a nationwide agency like Equifax, Experian, or TransUnion), a statement that the agency did not make the decision and cannot explain it, your right to a free copy of that report if you request it within 60 days, and your right to dispute inaccurate information directly with the agency.³

Credit Score Disclosure

If a credit score played a role, the notice must also give you the numerical score, the range of possible scores, the date the score was generated, and up to four key factors that hurt it. If the number of recent inquiries was itself a key factor, the notice may list up to five.⁴ This section is often the most practical part of the notice. It tells you which parts of your file weighed most heavily against you.

Specific Reasons for the Decision

The ECOA requires the creditor to either state the specific reasons for the denial or tell you that you can request them within 60 days.¹ Generic language like “you did not meet our standards” does not satisfy the rule. Regulatory guidance treats more than four principal reasons as unhelpful, so most notices list between two and four.⁵

The credit score key factors and the ECOA denial reasons look similar but do different jobs. Score factors come from the scoring model and explain what dragged down your number. ECOA reasons come from the creditor and explain why your application did not meet its underwriting criteria. A notice that gives only the score factors, with no separate ECOA reasons, does not comply with the law.⁴

Reasons generally fall into two camps. Some point to your credit file: late payments, high balances relative to limits, collections, a bankruptcy, or too many recent inquiries. Others point to the application itself: income too low for the amount requested, short employment history, or an inability to verify what you submitted. If the creditor denied you because you never submitted required documents, the notice must say the application was incomplete rather than substitute a creditworthiness reason.¹

The 30-Day Deadline

A creditor has 30 days to send the notice after receiving a completed application, taking adverse action on an existing account, or taking adverse action on an incomplete application. If the creditor made a counteroffer that you neither accepted nor used, the deadline stretches to 90 days after that counteroffer.¹

Silence is not compliance. The clock runs whether or not the creditor gets around to reviewing your file, and a creditor that misses the deadline is violating the regulation.

What to Do After You Get the Notice

Request the Free Report Within 60 Days

The notice will name the credit reporting agency that supplied the file. You have 60 days from receiving the notice to ask that agency for a free copy of the report.⁶ This copy is separate from the free annual report you already receive, so ordering it does not use up your yearly allotment. Get it. You need to see the exact data the creditor saw.

Check for Errors and Dispute Them

Read the report line by line. Look for accounts you do not recognize, balances that look wrong, on-time payments marked late, and anything else that does not match your records. A single misreported late payment or a stray account belonging to someone else is enough to derail an application.

If you find inaccuracies, dispute them in writing with the credit reporting agency and attach copies of your supporting documents. The agency must investigate for free and generally has 30 days to finish, extendable by 15 days if you send additional information during the window. Anything the agency cannot verify has to be corrected or deleted.⁷

Ask the Lender to Reconsider

A denial is not always final. Most major lenders have a reconsideration process, and Regulation B requires creditors to consider additional information you present that bears on creditworthiness. Call the reconsideration line with the notice in front of you and address each listed reason directly. If you can send updated documents, like a recent pay stub or proof that a collection was paid, ask during the call for a mailing address or fax number.

If the Notice Never Arrived or Was Incomplete

When a company denies you without sending a notice, sends one missing required information, or takes action that looks discriminatory, you can file a complaint with the Consumer Financial Protection Bureau. The online form lets you describe the problem, identify the company, and attach up to 50 pages of documents. Most companies respond within 15 days, and you then have 60 days to say whether the response resolved the issue.⁸

Both laws also allow private lawsuits. Under the FCRA, willful violations expose the company to your actual damages or statutory damages of $100 to $1,000 per violation, whichever is greater, plus possible punitive damages, attorney fees, and costs.⁹ Negligent violations get actual damages and attorney fees, but no punitives.¹⁰ Under the ECOA, an individual can recover actual damages plus punitive damages of up to $10,000, along with attorney fees and costs.¹¹

Two Notices That Are Not the Same Thing

Risk-Based Pricing Notices

If you were approved for credit but at less favorable terms than the lender’s best customers get, what you may receive is a risk-based pricing notice, not an adverse action notice. It tells you your credit profile placed you in a higher-priced tier. A creditor that sends an adverse action notice for a particular transaction does not also have to send a risk-based pricing notice for the same transaction, and many lenders skip the risk-based pricing notice by giving every applicant a credit score disclosure at the time of decision instead.¹² If you were denied outright, though, a score disclosure alone is not enough; you should get the full adverse action notice.

Employment Background Checks

Employers using background checks follow a two-step process. Before taking adverse action based on a consumer report, the employer must send a pre-adverse action notice that includes a copy of the report and a written summary of your FCRA rights, so you can review the report and dispute errors before the decision becomes final.¹³ The FCRA does not set a specific waiting period, only a reasonable one, though some state and local laws impose longer windows. If the employer proceeds, a second notice must follow with the same disclosures required in any other adverse action notice.³

1
Consumer Financial Protection Bureau. 12 CFR 1002.9 – Notifications
2
Consumer Compliance Outlook. Adverse Action Notice Requirements Under the ECOA and the FCRA
3
Office of the Law Revision Counsel. 15 USC 1681m – Requirements on Users of Consumer Reports
4
Consumer Financial Protection Bureau. 12 CFR 1002.9 – Notifications – Official Interpretations
5
eCFR. 12 CFR Part 1002 – Equal Credit Opportunity Act (Regulation B) – Supplement I Official Interpretations
6
Office of the Law Revision Counsel. 15 USC 1681j – Charges for Certain Disclosures
7
Office of the Law Revision Counsel. 15 USC 1681i – Procedure in Case of Disputed Accuracy
8
Consumer Financial Protection Bureau. Submit a Complaint
9
Office of the Law Revision Counsel. 15 USC 1681n – Civil Liability for Willful Noncompliance
10
Office of the Law Revision Counsel. 15 USC 1681o – Civil Liability for Negligent Noncompliance
11
Office of the Law Revision Counsel. 15 USC 1691e – Civil Liability
12
Consumer Financial Protection Bureau. 12 CFR 1022.74 – Exceptions
13
Office of the Law Revision Counsel. 15 USC 1681b – Permissible Purposes of Consumer Reports