What needs to be included in an adverse action notice?

Asked by: Prof. Yoshiko Nicolas Jr.  |  Last update: December 22, 2025
Score: 4.2/5 (64 votes)

A statement of action taken by the creditor. Either a statement of the specific reasons for the action taken or a disclosure of the applicant's right to a statement of specific reasons and the name, address, and telephone number of the person or office from which this information can be obtained.

What must an adverse action notice include?

Beginning July 21, 2011, addi- tional information that must be provided in adverse action notices includes: (i) the consumer's credit score; (ii) the date the score was created; (iii) the range of possible credit scores under the model used to generate the score; (iv) the key factors that adversely affected the ...

What does adverse action include?

An adverse action is a formal administrative action taken to correct an employee's on-the-job behavior or performance. It imposes one or more penalties: official reprimand, salary reduction, suspension without pay, demotion or dismissal.

Which of the following must be included in an ECOA adverse action?

Notifications of adverse action are required to be in writing and must include the following contents: Statement of action taken. Name and address of the creditor. Statement of the provisions of section 701(a) of ECOA.

What is included in FCRA adverse action?

Adverse action is defined in the Equal Credit Opportunity Act and the FCRA to include: a denial or revocation of credit. a refusal to grant credit in the amount or terms requested. a negative change in account terms in connection with an unfavorable review of a consumer's account 5 U.S.C.

How To Send An Adverse Action Notice (with Sample)

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What items must be contained in the notice of action taken?

A statement of action taken by the creditor. Either a statement of the specific reasons for the action taken or a disclosure of the applicant's right to a statement of specific reasons and the name, address, and telephone number of the person or office from which this information can be obtained.

Which disclosures are mandatory under FCRA?

Under Section 609(a) of FCRA, all consumer reporting agencies must clearly and accurately disclose to a consumer, upon request, “[a]ll information in the consumer's file at the time of request” and “[t]he sources of the information.” Moreover, FCRA defines a consumer's file as “all of the information on that consumer ...

What are ECOA requirements?

Except as otherwise permitted or required by law, a creditor shall not consider race, color, religion, national origin, or sex (or an applicant's or other person's decision not to provide the information) in any aspect of a credit transaction.

What are two questions you should avoid asking based on ECOA?

Your marital status cannot be used against you when evaluating your credit application. Any questions about your race, ethnicity and gender cannot be used as a reason to approve or deny your credit application.

What is required for a statement of reasons for adverse action under ECOA?

Consumer adverse action requires: 1) a statement of the action taken in writing, 2) the name and address of the creditor in writing, 3) the ECOA notice (which includes a statement of the provisions of section 701(a) of the Act and the name and address of the institutions Federal regulator) in writing, and 4) either: a ...

What is not considered an adverse action?

A furlough of 30 days or less (which typically occurs for budgetary reasons) is also conducted under the rules for adverse actions. However, a longer furlough, removal due to a reduction in force (RIF), or demotion due to a RIF is not an “adverse action” and is conducted under the rules set forth in 5 C.F.R. part 351.

What is a post-adverse action notice?

If, after a second review, the employer is still deciding against promoting or hiring the candidate due to the contents of the background check, the employer then must release a notice of adverse action to explain their decision. This notice can be delivered electronically or in a hard-copy form.

What is the 30 day ecoa rule?

A creditor must notify an applicant of action taken on the applicant's request for credit, whether favorable or adverse, within 30 days after receiving a completed application.

What is an example of an adverse action?

The following are examples of adverse actions employers might take: discharging the worker; demoting the worker; reprimanding the worker; committing harassment; creating a hostile work environment; laying the worker off; failing to hire or promote a worker; blacklisting the worker; transferring the worker to another ...

What is required in a pre adverse action letter?

Legal Requirements of Pre-Adverse Action
  • A clear explanation of the negative findings.
  • Details about the consumer reporting agency that provided the report.
  • A copy of a document called “Summary of Your Rights Under the Fair Credit Reporting Act.”
  • An actual copy of the problematic background check report.

What is Section 1100F of the Dodd Frank Act?

Section 1100F of the Dodd-Frank Act amended the FCRA to require disclosure of credit scores and information relating to credit scores for both risk-based pricing and FCRA adverse action notices.

What violates ECOA?

This Act (Title VII of the Consumer Credit Protection Act) prohibits discrimination on the basis of race, color, religion, national origin, sex, marital status, age, receipt of public assistance, or good faith exercise of any rights under the Consumer Credit Protection Act.

What questions is a lender not allowed to ask?

While it may seem that a lender can ask anything, there are two topics that are illegal to require borrowers to answer: family planning and health issues. Lenders may not ask if you a starting a family because they may assume female borrowers will quit their jobs if they become pregnant.

What is not prohibited under ECOA?

A creditor's consideration of state property laws that affect creditworthiness (directly or indirectly) does not constitute unlawful discrimination under ECOA.

What information must be included in an adverse action notice?

This final adverse action notice must include the name, phone number, and address of the CRA that completed the report, language around the fact that candidates have the right to dispute the accuracy of results and can obtain an additional free report within 60 days, and confirmation that the CRA did not make the ...

What are the principles of ECOA?

eCOA can help to ensure a clinical study follows the ALCOA principles of obtaining Attributable, Legible, Contemporaneous, Original and Accurate data.

What questions are prohibited by ECOA?

We recommend that you avoid asking applicants about personal characteristics that are protected by law, such as race, color, religion, sex, national origin or age.

What is an adverse action as defined by FCRA?

Multiple circumstances serve to answer the question, “What is an example of adverse action?” under the FCRA. Generally, an adverse action is a negative employment action taken against you by an employer or potential employer based on information in your credit report.

What is the 609 law?

Section 609 of the Fair Credit Reporting Act (FCRA) allows consumers to request their credit file information. It does not guarantee the removal of negative items but requires credit bureaus to verify the accuracy of disputed information.

What are the mandatory disclosures?

An applicant, recipient, or subrecipient of a Federal award must promptly disclose whenever, in connection with the Federal award (including any activities or subawards thereunder), it has credible evidence of the commission of a violation of Federal criminal law involving fraud, conflict of interest, bribery, or ...