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Credit Report Adverse Action Letter

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credit report adverse action letter notifies individuals that underwent credit screening that they were not accepted due to the results of the consumer report. It is required by law that consumers are informed following any adverse action against them, per the Fair Credit Reporting Act (FCRA). The notice informs the applicant of their rights, which includes their access to a free credit report as long as it is requested within sixty (60) days of the rejection. Prior to the adverse action report, the sending entity will often deliver a pre-adverse action notice. This provides the recipient with ample time to correct any issues in the credit report to obtain reports.

What is a Credit Report?

A credit report is a collection of an individual’s financial history, focusing on how they handled previous debt obligations. It is used by entities to determine if they can take on the risk of trusting a person with paying for rent, utility bills, and loan payments (to name a few examples). There are three (3) main credit reporting agencies:

  1. Experian
  2. Equifax
  3. Transunion

Who Can Pull a Credit Report?

Any entity can gain access to a person’s credit report if they have a justifiable reason for doing so. Entities that are known for using consumer credit reports include:

  • Creditors
  • Student loan providers
  • Financial institutions (banks)
  • Property managers (landlords)
  • Utility providers.

What’s Included?

Information contained in credit reports is often categorized into the following groups:

  • Accounts (most important) – Any money that is currently borrowed is included here. Credit card debt, mortgages, car loans, student loans, and so on. This also contains information on the terms of each debt and if the debtor has made timely payments.
  • Public records – This includes information that is available to the public via the court system, namely bankruptcies and debts that have been sent into collections.
  • Personal info – The name, address, phone number, birth date, employers, and SSN of the person being screened is available on the report.
  • Recent inquiries – The number of hard credit inquiries (and when they took place) from the past two (2) years is displayed on the report.