Adverse Action Notice
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.
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 there reason was my income was insufficient for amount of credit requested. They must state at least one reason why they declined you.
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 60 days of receiving the notice.