An adverse action notice tells you a company denied you or gave you worse terms based on a consumer report. It must name the reporting agency, say that agency didn't make the decision, include any credit score used, and explain your right to a free report within 60 days and to dispute errors.
Also called: adverse action letter, credit denial letter, denial notice, 15 U.S.C. 1681m
What it means
When a lender, insurer, landlord, or employer turns you down, or gives you worse terms, based even partly on a consumer report, it has to tell you. That notice is the adverse action notice. It is often the first sign that something on your report is wrong.
The FTC describes adverse action in credit as including a denial or revocation of credit, a refusal to grant credit in the amount or on the terms you asked for, and an unfavorable change to an existing account after a review.
What it must say
Under 15 U.S.C. § 1681m(a), the notice (oral, written, or electronic) must give you:
- The name, address, and phone number of the consumer reporting agency that supplied the report, with a toll-free number if the agency is nationwide.
- A statement that the agency did not make the decision and can’t explain the reasons for it.
- The credit score used, if any, with its key factors.
- Notice of your right to a free copy of your report from that agency if you ask within 60 days, and your right to dispute inaccurate or incomplete information.
Employment has an extra step
For jobs, § 1681b(b)(3) requires the employer to give you a copy of the report and a summary of your rights before it takes the adverse action. That “pre-adverse action” notice gives you a chance to point out errors first.
Risk-based pricing notices
If you were approved but on materially worse terms, such as a higher rate, you may get a risk-based pricing notice instead. The FTC explains that it tells you the terms were based on a report and gives you the same free-report and dispute rights.
What to do when you get one
- Note the agency named. It may be a nationwide specialty agency, not one of the big three.
- Request your free file disclosure within 60 days, as § 1681j(b) allows.
- Compare the report to your records and dispute anything wrong.
- Keep the notice. It helps prove the error cost you something.
When it can be an FCRA violation
Congress limited private lawsuits over § 1681m: under § 1681m(h)(8), the section is enforced by government agencies, not by consumers suing under the FCRA’s civil liability provisions. But the notice often leads to the real claim, against the agency that reported wrong information or the furnisher that supplied it. Employment pre-adverse action rights under § 1681b(b)(3) are a separate matter.
If the report behind a denial was wrong and the error isn’t fixed, FCRA Attorneys offers a free case review, and you pay no fee unless we win.
Related
- File disclosure
- Permissible purpose
- Consumer reporting agency
- Reinvestigation
- Nationwide specialty consumer reporting agency
- How to Dispute Credit Report Errors With Equifax, Experian and TransUnion
- Got a Pre-Adverse Action Notice? What It Means and What to Do Next
- Criminal Record Apartment Rights: What Landlords Can and Cannot Do
- Do I have an FCRA case?
Sources
- 15 U.S.C. § 1681m, requirements on users of consumer reports (Cornell LII)
- FTC, Using Consumer Reports for Credit Decisions: Adverse Action and Risk-Based Pricing Notices
- 15 U.S.C. § 1681j, charges for certain disclosures (Cornell LII)
- 15 U.S.C. § 1681b, permissible purposes of consumer reports (Cornell LII)
Updated November 2026. This glossary is written by FCRA Attorneys from public sources. It is general information, not legal advice, and is not affiliated with any credit bureau or industry association.