Denied Credit, a Loan, or a Job Because of Your Credit Report?

If you have been turned down for credit, a loan, a job, an apartment, or insurance — and the decision was based on information in your credit report or background check — the company that made that decision is required by federal law to tell you why. That notification is called an adverse action notice, and it is one of the most important consumer protections in federal law.

An adverse action notice is more than a rejection letter. It is the starting point for determining whether the decision was based on accurate information — or whether errors in your credit report or background check cost you an opportunity you should have had. If the underlying report contained inaccurate information, and the credit bureau or furnisher failed to correct it, you may have a legal claim under the Fair Credit Reporting Act (FCRA).

Schlanger Law Group represents consumers nationwide who have been wrongfully denied credit, loans, employment, and housing because of inaccurate credit reporting and background check errors. This page explains what an adverse action notice is, what rights it triggers, and what to do if you believe the decision was based on wrong information.

What Is an Adverse Action Notice and What Triggers One?

Under the Fair Credit Reporting Act (FCRA), any person or company that takes an adverse action against you based on information in a consumer report must provide you with a written adverse action notice. The FCRA requires the notice to include:

• The name, address, and phone number of the credit reporting agency or background check company that supplied the report.
• A statement that the agency did not make the decision and cannot explain the reasons for it.
• Notice that you have 60 days to request a free copy of your report from that agency.
• Notice of your right to dispute any information you believe is inaccurate or incomplete.

The FCRA itself does not prescribe a specific deadline for sending the adverse action notice, but it must be provided in connection with the adverse action. For credit decisions specifically, the Equal Credit Opportunity Act (ECOA) and its implementing regulation (Regulation B) impose additional requirements: the creditor must send the notice within 30 days after receiving a completed application, or within 90 days after making a counteroffer that the applicant does not accept. The ECOA also requires the notice to include the specific reasons for the denial (or a statement that you may request the reasons within 60 days) and your credit score if one was used. In practice, when a credit application is denied based on a credit report, both statutes apply, and the creditor typically sends a single combined notice satisfying both.

An adverse action is not limited to an outright denial. It includes any decision that negatively affects you based on a consumer report: a credit limit reduction, an interest rate increase, an account closure, less favorable loan terms than originally offered, or a decision not to hire, promote, or retain you.

Types of Adverse Actions

Adverse action notices arise in several different contexts. The legal requirements vary depending on who made the decision and what kind of report was used.

Credit and Loan Denials

The most common adverse actions involve credit applications. When a lender, credit card company, or other creditor denies your application — or approves it on less favorable terms — based on information in your credit report, you are entitled to an adverse action notice explaining why.

This includes denials for credit cards, mortgages, auto loans, personal loans, and lines of credit. It also includes situations where a creditor reduces your existing credit limit, raises your interest rate, or closes your account based on a review of your credit report.

Credit and loan denials are often the first sign that something is wrong with your credit report. The adverse action notice identifies which credit bureau supplied the report, giving you a starting point for investigating whether the report contains errors. For a detailed discussion of what to do when a loan is denied because of credit report errors, see our page on loan denials due to credit report errors.

For an overview of the types of credit report errors that commonly lead to denials, see our credit report errors hub page.

Employment Denials

Employers increasingly use credit reports and background checks as part of their hiring process. When an employer decides not to hire, promote, or retain an employee based on information in a consumer report, the FCRA imposes specific procedural requirements that go beyond what is required in the credit context. These are discussed in detail in the next section.

Employment-related adverse actions can be devastating. Unlike a credit denial, where the consequence is financial, losing a job or a job opportunity affects your livelihood, your career trajectory, and your ability to support your family.

For a comprehensive discussion of background check errors in the employment context, see our pages on background check errors and employment background check errors. For a full treatment of what to do when you are denied a job because of a background check, see our page on denied job due to background check errors.

Housing and Rental Denials

Landlords and property management companies routinely use tenant screening reports to evaluate rental applicants. These reports — produced by companies like RealPage, TransUnion SmartMove, CoreLogic, and others — compile credit history, eviction records, criminal records, and other information into a report that landlords use to make tenancy decisions.

When a landlord denies your application based on a tenant screening report, the landlord must provide an adverse action notice identifying the screening company and your right to obtain a free copy of the report. Many landlords fail to provide this notice, which is itself a legal violation.

Tenant screening reports are frequently inaccurate. They may contain eviction records that belong to someone else, criminal records that have been sealed or expunged, or outdated information that should no longer be reported. For more on your rights in the tenant screening context, see our page on tenant screening errors and our article on your rights when landlords check your credit.

Insurance Decisions

Insurance companies use credit-based insurance scores to make underwriting decisions. If an insurer denies coverage, charges a higher premium, or reduces coverage based on your credit information, the insurer must provide an adverse action notice. While insurance-related adverse actions are a less common basis for litigation, the same FCRA obligations apply: the insurer must identify the source of the information, and you have the right to obtain a free copy of the report and dispute any errors.

Pre-Adverse Action vs. Adverse Action: Why the Process Matters

For employment decisions, the FCRA imposes a two-step process that provides greater protections than what is required in the credit or housing context. Employers who use consumer reports in hiring, promotion, or retention decisions must follow both steps — and many do not.

Step one is the pre-adverse action notice. Before making a final decision based on a consumer report, the employer must provide the applicant or employee with a copy of the report that was used and a written summary of the consumer’s rights under the FCRA. The purpose of this step is to give the individual an opportunity to review the report, identify any errors, and dispute inaccurate information before the employer makes a final decision.

Step two is the waiting period and final adverse action notice. After providing the pre-adverse action notice, the employer must wait a reasonable period — industry practice is typically five business days — before making a final decision. Only after this waiting period may the employer send a final adverse action notice confirming the decision.

This two-step process exists because employment decisions are high-stakes and difficult to reverse. A credit denial can be remedied by reapplying after correcting an error. A lost job opportunity often cannot be recovered. The pre-adverse action requirement gives consumers a meaningful chance to catch errors before the damage is done.

Many employers skip the pre-adverse action step entirely. They pull a background check, make a decision, and either send a single rejection notice or — more commonly — simply never respond to the applicant at all. When the underlying report contains errors, this is particularly harmful: the applicant whose background check contains someone else’s criminal record or an inaccurate employment history never gets the chance to see the report, identify the mistake, and correct it before losing the job. The pre-adverse action step is the consumer’s last line of defense against inaccurate information — and when employers skip it, consumers with errors on their reports pay the price.

This problem is becoming more acute as employers adopt AI-driven screening tools that evaluate applicants algorithmically. When an AI system scores and filters candidates based on consumer report data without providing the required pre-adverse action notice, applicants whose files contain inaccurate information have no opportunity to review or correct errors before being screened out. For more on this issue, see our article on what the FCRA case against Eightfold AI means for job applicants.

A growing number of states have gone further, restricting or prohibiting employers from using credit reports in employment decisions altogether. New York’s Employment Credit Check Ban, effective April 18, 2026, prohibits most employers in the state from requesting or using consumer credit history for hiring, firing, promotion, or compensation decisions. Similar laws are in effect in California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, and Washington, as well as in cities including Chicago and Philadelphia. For more on New York’s law, see our NY Employment Credit Check Ban FAQ.

When an Adverse Action Becomes a Legal Violation

Not every denial is actionable. If a lender reviews an accurate credit report and makes a legitimate underwriting decision based on a genuinely low credit score, that is the system working as intended. But many adverse actions are based on information that is inaccurate, incomplete, or improperly reported — and that is where the law provides a remedy.

The core of most FCRA adverse action claims is inaccurate information. If your credit report or background check contains errors — an account that is not yours, a balance that was paid off, a debt that was discharged in bankruptcy, a criminal record that belongs to someone else — and that inaccurate information caused the adverse action, you have the foundation of an FCRA claim. The claim strengthens significantly if you disputed the error with the credit bureau or background check company and they failed to conduct a reasonable investigation or refused to correct it. A credit reporting agency that receives a dispute supported by documentation and simply “parrots” back the furnisher’s original response without meaningful investigation has not met its legal obligations.

Process failures compound the harm when the information is wrong. When an employer skips the pre-adverse action step and the underlying report contains errors, the consumer never gets the opportunity to catch the mistake before losing the job. When a report includes outdated information that should no longer be reported under the FCRA’s time limits, the consumer is harmed by data that should have been removed. In each of these situations, the procedural failure and the underlying inaccuracy work together to cause real, concrete harm to the consumer.

What is NOT actionable: A decision based on accurate, properly reported information, made through the correct process, is not an FCRA violation. If your credit score is genuinely low because of missed payments or high balances, and the creditor followed all required procedures, the denial is lawful — even if it is frustrating. Similarly, in light of recent Supreme Court precedents taking a narrow view of what constitutes an “injury” that can support a federal suit, claims involving only procedural violations — such as a missing or deficient adverse action notice — without any underlying inaccuracy in the consumer report may be vulnerable to dismissal for lack of standing. The strongest claims are those where inaccurate information caused real harm: a lost job, a denied loan, higher interest rates, or other tangible consequences. An FCRA attorney can help you determine whether your situation involves the kind of inaccurate reporting that supports a viable legal claim.

For more on when credit report errors cross the line into legal violations, see our article on when credit report errors become FCRA violations.

What to Do After Receiving an Adverse Action Notice

If you receive an adverse action notice — or if you are denied credit, a job, or housing and never receive the notice you were entitled to — these are the steps you should take.

Read the notice carefully. Identify which credit reporting agency or background check company supplied the report and the specific reasons cited for the denial. If the notice does not include specific reasons, you have the right to request them within 60 days.

Get your credit reports. Free credit reports from the three major bureaus — Equifax, Experian, and TransUnion — are now available on a weekly basis through annualcreditreport.com, so you can and should pull reports from all three promptly, since the error may appear on more than one bureau’s report. If the adverse action was based on a specialty consumer report — such as a tenant screening report or employment background check — you have 60 days from the date of the adverse action notice to request a free copy from the company that produced it. This 60-day right is particularly important for specialty reports, which are not available through annualcreditreport.com and may otherwise be difficult to obtain.

Review the reports for errors. Look for accounts you do not recognize, incorrect balances, accounts reported as delinquent that were paid on time, debts discharged in bankruptcy that are still showing as active, and any indication of identity theft. If the adverse action was based on a background check, request a copy of that report as well and review it for criminal records, eviction records, or employment history that does not belong to you.

Dispute any errors in writing. If you find inaccurate information, file a written dispute with the credit bureau or background check company. Send your dispute by certified mail with return receipt requested and include copies of any documentation supporting your position. The agency has 30 days to investigate and respond. For more on the dispute process, see our guide on how to fix an error on your credit report.

Document everything. Keep copies of the adverse action notice, your dispute letters, all responses from the credit bureaus, and any evidence of harm caused by the denial — including other denial letters, records of higher interest rates offered, lost deposits, or evidence of lost employment opportunities.

Contact a consumer protection attorney if the dispute fails. If the credit bureau or background check company refuses to correct the error after your dispute, or if you never received the adverse action notice you were entitled to, a consumer protection attorney can evaluate whether you have a legal claim. For more on what to do when a dispute is denied, see our article on what to do when your credit report dispute is denied.

How Schlanger Law Group Helps Consumers Who Were Wrongfully Denied

Schlanger Law Group has represented victims of inaccurate credit reporting and background check errors since 2007, and adverse action claims are one of our core practice areas. The firm’s attorneys, led by Harvard Law School graduate Daniel Schlanger, have been recognized by the New York Times, the Wall Street Journal, and other national media for their work in consumer protection, and the firm is a national leader in credit reporting and identity theft litigation.

The damages in adverse action cases can be substantial. Consumers who were wrongfully denied may be entitled to recover compensation for the credit opportunities they lost, the higher interest rates they were forced to pay, the jobs or housing they did not get, and the emotional distress caused by the experience. The FCRA also provides for statutory damages of $100 to $1,000 per willful violation, punitive damages with no statutory cap, and attorney’s fees and costs paid by the defendant — which means qualified consumers can typically retain experienced legal representation at no out-of-pocket cost.

Although every case is different and no outcome can ever be guaranteed, Schlanger Law Group has regularly achieved outstanding, six-figure settlements for clients harmed by credit reporting errors. For more on our firm’s track record, see our case results page.

Schlanger Law Group has represented victims of credit reporting errors and adverse action violations since 2007, and these claims are one of our core practice areas. We typically represent victims on a contingency fee basis and handle cases nationwide. If you have been denied credit, a loan, a job, or housing because of inaccurate information on your credit report or background check, contact us today to discuss your options.

Frequently Asked Questions About Adverse Action Notices

What is an adverse action notice?

An adverse action notice is a written notification that a company is required to send you when it takes a negative action — such as denying your application for credit, a loan, a job, or housing — based in whole or in part on information in your credit report or background check. Federal law requires the notice to identify the credit reporting agency or screening company that supplied the report, inform you of your right to obtain a free copy of the report, and tell you that you have the right to dispute any information you believe is inaccurate.

How do I get a copy of the report that was used against me?

For credit reports from the three major bureaus (Equifax, Experian, and TransUnion), free reports are now available on a weekly basis through annualcreditreport.com — so you can pull all three immediately, without waiting. You should check all three, since the error may appear on more than one bureau’s report. If the adverse action was based on a specialty report — such as a tenant screening report or an employment background check — you have 60 days from the date of the adverse action notice to request a free copy from the company that produced it. This 60-day right is especially important for specialty reports, which are not available through annualcreditreport.com.

Can I be denied a job because of my credit report?

Under federal law, employers may use credit reports in employment decisions, but only if they follow specific FCRA procedures — including providing a clear, standalone written disclosure before pulling the report, obtaining your written authorization, and following the two-step pre-adverse action process before making a final decision. However, a growing number of states prohibit or restrict the use of credit reports in employment decisions. New York’s Employment Credit Check Ban, effective April 18, 2026, prohibits most New York employers from requesting or using consumer credit history for hiring, firing, promotion, or compensation. Similar restrictions exist in California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, Washington, and several major cities. For more details, see our NY Employment Credit Check Ban FAQ.

What should I do if I was denied a job or housing and never received an adverse action notice?

If you applied for a job or an apartment and were rejected without ever receiving an adverse action notice — and you believe the decision may have been based on your credit report or background check — the failure to provide the notice is itself an FCRA violation. This is especially common in the employment context, where many employers either send a single rejection without the required pre-adverse action step or simply stop responding to applicants. You should request copies of your credit reports and background check files to determine whether they were accessed, and consult with a consumer protection attorney about your options.

Can I sue if I was denied credit because of an error on my credit report?

If your credit report or background check contained inaccurate information that caused you to be denied, you may have a claim under the Fair Credit Reporting Act. FCRA claims can arise in a variety of situations — a credit bureau or furnisher that failed to correct errors after a dispute, an employer that never provided a pre-adverse action notice giving you a chance to identify mistakes on your background check, or a creditor that relied on a report containing information that should never have been reported in the first place. The FCRA provides for actual damages (including lost credit opportunities and emotional distress), statutory damages of $100 to $1,000 per willful violation, punitive damages, and attorney’s fees. An experienced FCRA attorney can review your situation and advise you on whether you have a viable claim. For an overview of your rights under the FCRA, see our FCRA lawyer page.

If you have received an adverse action notice — or were denied credit, a loan, a job, or housing without ever receiving one — and you believe the decision was based on inaccurate information, contact Schlanger Law Group today for a free case review.