An Adverse Action Notice should be sent when a denial of credit occurs

A disclosure should be provided to consumers who are denied credit by a bank or lender.

An adverse action occurs when a bank or lender utilizes a credit report or credit score in making a decision to deny credit, change credit terms, raise interest rate or lower credit limit.

An adverse action notice discloses, at a minimum, information about the reasons you were denied or how you can obtain that information.

The format of the notice will differ from lender to lender but the notice will more than likely contain the following:

• Name and address of the financial institution
• The reasons for the denial or a disclosure of your right to request a statement of the specific reasons for the denial
• Name, address and phone number of the credit reporting agency which supplied the credit report
• Information on how to obtain a free credit report within 60 days after receiving the adverse action notice.

According to the Fair Credit Reporting Act and the Equal Credit Opportunity Act an Adverse Action Notice is sent when a credit report is used by a bank to deny credit to an applicant, make an unfavorable change in credit terms to an applicant or current borrower. The reasons why an adverse action occurs is based on information in a consumer’s credit history such as the following:

• Late payments
• Collection accounts
• Judgment
• Lack of credit history
• Little to no credit experience
• Numerous recent credit inquiries
• A foreclosure
• A repossession
• Bankruptcy

If you receive any adverse decision based upon your credit history you should receive an adverse action notice. The notice will inform you how and where to get a free credit report but you must request the credit report within 60 days of the adverse action notice. Know where you stand before you apply for credit — Get your Equifax credit score today!