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Adverse Action Notice - What It Means

An adverse action notice is the notification a person recieves when they are denied for a line of credit. I wrote this after receiving one myself for a car loan.

I recently received an adverse action notice, because I was declined for an auto loan through my credit union. The reason being my income was too low even though my credit score was over 700.

Adverse Action Notice - What is It?

What exactly is an adverse action notice? This form tells you why you were declined and what action the bank performed. The two parts in a notice are the banks actions, and the main reason for credit denial, account termination, or other action.

The most common reason for an adverse action is a refusal to grant a loan. There are other actions: suspension of credit line, termination of loan account, change in loan unfavorable to borrower, and refusal to honor requested increase in available credit.

After the creditor tells you what action they have taken they list the reason why you were declined. In my case the credit union’s action was refusal to grant loan and their reason was my income was insufficient for amount of credit requested. There is usually at least one reason stated for the declination. The bank may offer a counter offer or they may not this varies depending on why you were denied.

The notice declares which credit reporting agency the creditor used to check your credit record. In my case they used TransUnion but there is also Equifax and Experian. If you receive an adverse action notice you may receive a copy of your credit report for free if you request it from the same agency as your bank did, and it is requested within sufficient time of receiving the notice in my case it was 60 days.