What's an adverse action notice?

If you decide to deny an applicant's rental application due to information you receive from a consumer report (also known as a credit, criminal or eviction report), you are legally obligated to provide notice / letter (an adverse action notice) explaining why. If you don't, you are in danger of violating laws regarding the use of credit reports, including the Fair Credit Reporting Act.

Details for the notice include, but are not limited to:

  • contact information relating to the consumer reporting agencies' providing such information, so that an applicant can obtain a free copy of the consumer report used to make a decision;
  • a statement declaring the agency supplying the report did not make the decision to take adverse action and cannot give the specific reasons for it; and
  • information on the applicant's rights to dispute the accuracy of the information obtained by the consumer reporting agency and a consumer can receive a free report from the agency upon request within 60 days.

It's best to provide the letter in writing, but whether you send it electronically via email or mail a physical copy, make sure to keep a dated copy as a record.

For more information on the FCRA and Adverse Actions Notice, visit the Consumer Financial Protection Bureau's (CFPB) website.

Visit CFPB Website