When a consumer applies for a mortgage, auto loan or a credit card credit and is denied, the federal government requires the lender rejecting the application to provide the consumer with certain details on why this occurred. These details are contained within what is called an Adverse Action Notice.
The Notice must contain specific information about why credit was denied and the consumer’s rights regarding the process. It should include:
- The name, address and phone number of the consumer reporting agency that provided the credit report used in the decision
- The numeric credit score used as part of the decision
- The factors that contributed to that credit score; and
- Information on how to obtain a free copy of one’s credit report from the consumer reporting agency identified in the notice. The report must be ordered within 60 days.
The Adverse Action Notice will also explain that the consumer has a right to dispute any inaccurate or incomplete information they identify on the credit report with the consumer reporting agency. The lender associated with the information in question can also be contacted directly to see if they will assist with the matter.
- If turned down for credit, a consumer will receive an Adverse Action Notice
- Consumers are entitled to request a free credit report within 60 days of receiving an Adverse Action Notice
- Consumers should review their credit report for any inaccuracies and/or signs of fraud
- Consumers have a right to dispute any inaccuracies on their credit report with the consumer reporting agency identified in their notice