Are Lenders Required to Send Consumer Credit Score Disclosure Letters?

When you are denied credit from a lender, the lender must send you a credit disclosure letter that explains exactly why you were denied credit. Any company using information on your credit report to offer you credit, bank accounts, insurance or a job is required to let you know exactly why you were denied, and what credit bureau report the information comes from for a denial.

Fair Credit Reporting Act

A consumer credit disclosure letter, commonly known as an adverse action letter, is required by the Fair Credit Reporting Act. The lender is legally required to send an adverse action letter when information on your credit report leads to a credit denial. Adverse action letters are also used if the lender charges you rates or fees not normally incurred due to your credit.

Required Information

The lender must include specific information on the adverse action letter to fulfill the legal requirements set forth by the Fair Credit Reporting Act. The disclosure letter must provide the consumer with the specific credit reporting agency that the information was pulled from, specifically the name, address and telephone number of the agency. A note also must be included telling the consumer that the agency itself does not know the specific reasons that your application was denied or your fees are higher than average. The last required piece of information on the letter is your rights under the FCRA. You can dispute inaccurate information on your report that may have resulted in the denial, and you are also entitled to a free report.

Time Line

The Fair Credit Reporting Act does not establish a specific time frame for the lender to send out an adverse action letter, only that it must be provided within a "reasonable time frame." In many cases, the letter is received within two weeks to a month after the lender denies credit.

Recourse

If a lender does not provide you with an adverse action letter after denying you credit or taking another form of negative action against you due to information on your credit report, you have the right to sue the lender for failing to follow its obligations under the Fair Credit Reporting Act.