Adverse Action Form – Fill Out and Use This PDF

Adverse Action Form PDF Details

What an Adverse Action Notice Must Contain

An adverse action notice is a formal written document delivered when a financial institution, landlord, or employer takes an adverse action based on information obtained from a consumer reporting agency. The notice must identify the reporting agency that provided the information, state the specific reasons for the adverse decision, and inform the applicant of their rights under federal law. Failure to comply with the Fair Credit Reporting Act and Equal Credit Opportunity Act can result in regulatory penalties and civil liability.

At a minimum, the adverse action notice must include the name, address, and phone number of the consumer reporting agency, a statement that the agency did not make the adverse decision and cannot explain the specific reasons for it, and details on the applicant's right to obtain a free copy of their consumer report within 60 days. When a credit score was a factor in the decision, the notice must also list the credit score, the date it was obtained, the range of possible scores, and the key factors that affected the score.

Who Must Provide an Adverse Action Notice

Any entity that takes adverse action based on a consumer report must provide this notice. This includes banks and credit unions that deny a checking or savings account application, mortgage lenders and auto finance companies that deny a loan application, landlords who decline a rental application based on a tenant background report, and employers who decide not to hire an applicant based on a background check. Businesses that extend credit and take any adverse action related to that credit must also comply with these notification requirements.

In employment settings, a pre-adverse action notice is required before the final adverse decision. The employer must provide the applicant with a copy of the consumer report and a written description of their rights, giving the applicant a reasonable period to dispute any inaccurate information before the final decision is made. Applicants who need to challenge information in their consumer file can use a credit report dispute form. Landlords and employers who screen applicants should also obtain a signed background check consent form before requesting any consumer report.

Chex Systems, Inc. provides Notice of Adverse Action Form samples to help financial institutions comply with regulatory requirements. The Dodd-Frank Act added requirements for including credit score disclosures when a score was used in the adverse decision. Institutions must list the credit score, the score date, the score range, and the key factors that affected the score when disclosing this information on the adverse action notice.