Adverse action notices: how to read the letter and use it

The denial letter is easy to throw away. It reads like boilerplate, it arrives a week after the disappointment, and the lender’s decision already feels final.

Keep it. It is one of the few documents where a lender has to show you what it saw. It can tell you which bureau’s report was used, the exact score the lender saw (which may not match any score you’ve seen), and the factors that pulled that score down. It also opens a 60-day window for a free copy of the report.

Two federal laws stack on the same letter

An adverse action notice usually satisfies two different laws at once, and each requires different things.

The FCRA definition of adverse action is broad. For insurance, it covers an increase in any charge or an unfavorable change in coverage; for employment, any decision that adversely affects a current or prospective employee (15 U.S.C. 1681a(k)). So a landlord demanding a bigger deposit or an insurer raising your premium because of your report owes you the FCRA disclosures, even though no loan was denied.

The score part works differently outside lending. Section 1681m points to the FCRA’s definition of “credit score” in 1681g(f), which describes a number from a model used by someone who makes or arranges a loan. An insurer’s or employer’s notice may name the bureau and spell out your rights without showing any score.

The timing rules lenders have to meet

Regulation B gives creditors 30 days after receiving a completed application to notify you of adverse action. The same 30 days applies after adverse action on an incomplete application or on an existing account, like a credit limit cut.

Counteroffers get their own clock. If a lender offers you something different from what you applied for (a smaller limit, a higher rate, a shorter term) and you don’t accept or use it, the creditor has 90 days after the counteroffer to send the adverse action notice.

The reasons can come in two ways. The creditor can list the specific reasons in the letter, or it can tell you that you have a right to them. If it takes the second route, you have 60 days from the notice to ask, and the creditor then has 30 days from your request to answer.

Reading the letter, section by section

Below is a sample of the score section. The lender, numbers and factor wording are illustrative.

Example notice, score disclosure section:

• Your credit score: 618
• Scores range from 300 to 850
• Date: September 22, 2026
• Source: Experian
• Key factors that adversely affected your score:
  1. Proportion of balances to credit limits on revolving accounts is too high
  2. Time since most recent delinquency is too recent
  3. Too many accounts with balances
  4. Length of time accounts have been established
  5. Number of recent inquiries

Five things to pull out of that:

1. The score is the lender’s score, not your app’s. A 618 on a 300 to 850 range from Experian could be a FICO 8, a classic mortgage FICO, or something else. If your app shows 655, both can be correct. Why your free score doesn’t match your lender’s explains the gap.
2. The order matters. Under 15 U.S.C. 1681g(f), key factors are listed in order of their importance to your score. The first one is the biggest drag.
3. There’s a cap, with one exception. The statute limits the list to four key factors, but if the number of inquiries adversely affected the score, it must be included without regard to that limit. That’s why the example shows five.
4. The range tells you the model family. A range of 250 to 900 points to an industry score like a FICO Auto Score or Bankcard Score. A 300 to 850 range covers base FICO and VantageScore 3.0 and 4.0.
5. The bureau name tells you which report to pull. The other two bureaus may show different data.

To translate the factor wording into specific moves, run the codes through the score decoder, or read credit score reason codes, decoded.

“Didn’t meet our criteria” is not a reason

Regulation B requires the reasons to be specific and to indicate the principal reason or reasons for the action. The regulation spells out two statements that don’t count: that the decision was based on the creditor’s internal standards or policies, and that you failed to achieve a qualifying score on the creditor’s scoring system.

If your letter says only something like that, and it doesn’t offer a way to request reasons, write back within 60 days and ask for the specific reasons in writing. Lenders deny for non-credit reasons too (income, debt-to-income, length of employment, incomplete documents), and those reasons belong in the ECOA part of the notice even when your score was fine.

The 60-day free report, and how to use it

The FCRA notice must tell you that you can get a free copy of the report from the bureau that supplied it if you ask within 60 days. This is separate from your free weekly reports at AnnualCreditReport.com, and it ties you to the exact bureau that mattered. Our guide to getting your credit reports covers the request methods.

The notice must also say the bureau didn’t make the decision and can’t explain why it was made. Don’t ask the bureau why you were denied. Ask it for the report, then compare that report to the key factors:

• “Time since most recent delinquency is too recent”: find that late payment. Is it yours? Is the date right?
• “Proportion of balances to credit limits is too high”: check that each card shows the right limit. A missing limit can make utilization look worse than it is.
• “Number of accounts with delinquency”: look for duplicate collections or accounts you don’t recognize.

Anything inaccurate, incomplete or unverifiable can be disputed. How to dispute a credit report error has the process. Accurate negatives stay, so build your plan around them instead of disputing them.

When you’re approved, but not on the best terms

If you accept a loan at a higher rate because of your credit report, you may get a risk-based pricing notice instead of an adverse action notice. Under 15 U.S.C. 1681m(h), that notice applies when a creditor uses a consumer report to grant credit on terms materially less favorable than those offered to a substantial proportion of consumers. It must identify the bureau, tell you how to get a free copy of the report, and include the credit score information described in the adverse action section. Treat it the same way.

What to do in the next 60 days

1. Keep the letter. Note the date it was sent.
2. Write down the score, range, bureau and key factors.
3. Request your free report from the named bureau before day 60.
4. If the creditor didn’t give specific reasons, request them in writing before day 60.
5. Compare the report to the key factors and dispute anything that’s wrong.
6. For accurate factors, start on the one listed first, and hold off on new applications until it has changed.