Adverse action letter template
Key Information to Include
An adverse action letter is an essential document when notifying someone about a decision that negatively impacts them. It is required by law in some cases, especially when the decision is based on consumer reports, such as credit or background checks. The letter should be clear, direct, and include all the necessary details. Here’s a template to follow:
Template for Adverse Action Letter
Dear [Applicant Name],
We regret to inform you that after careful consideration, we are unable to move forward with your [application/loan/credit request/employment offer] at this time due to the information obtained from your consumer report.
This decision was made based on the following specific factors:
- [Explain the specific information from the report that led to the decision]
In accordance with the Fair Credit Reporting Act (FCRA), we are providing you with the following details:
- Consumer Reporting Agency: [Name of the agency]
- Contact Information for the Agency: [Address, phone number, or website]
- Right to Dispute Information: You have the right to dispute the information that we used in making this decision. Please contact the consumer reporting agency directly for more details.
- Free Credit Report: You are entitled to a free copy of your credit report from the reporting agency within 60 days. You may request it at [website or phone number for free report].
If you believe there has been an error in your report or if you have any further questions, do not hesitate to contact us. Thank you for your understanding.
Sincerely,
[Your Name]
[Your Title]
[Your Contact Information]
Additional Tips
- Ensure that the letter is sent in a timely manner, as required by law.
- Provide accurate details to avoid potential legal issues or confusion.
- If the adverse action is based on a credit report, always include the name and contact details of the reporting agency.
Adverse Action Letter Template: A Complete Guide
Understanding the Purpose of an Adverse Action Notification
Key Elements to Include in Your Document
How to Customize the Adverse Action Notice
Common Errors to Avoid in an Adverse Action Letter
Template Layout: A Detailed Step-by-Step Walkthrough
Legal Considerations When Issuing an Adverse Action Notification
To ensure your adverse action letter is clear and compliant, always include the reason for the decision and the applicant’s rights. This transparency can help avoid misunderstandings and legal issues.
Key elements to include: Start with a header identifying your company. Clearly state that the letter is a notification of adverse action. Include the specific action taken (e.g., employment denial, credit denial) and the reason behind it. Mention any relevant laws or rights the individual has, such as the right to dispute the information used to make the decision.
When customizing the letter, tailor the content to the specific situation. If the adverse action pertains to a job application, specify the position. For credit-related actions, note the credit report or score involved. Always ensure that the language reflects the nature of the decision.
Avoid common mistakes like failing to explain the reason for the decision clearly, neglecting to include rights regarding dispute or appeal, and omitting contact information for further questions or clarifications. These errors could lead to confusion and potential legal challenges.
The template layout should follow a simple structure: Company header, subject line, body with the action and reasons, contact details, and any legal disclaimers or rights. This clear, logical flow helps recipients easily understand the message.
Legal considerations include ensuring compliance with regulations like the Fair Credit Reporting Act (FCRA) for credit decisions, or anti-discrimination laws for employment decisions. Confirm that the letter includes all required information within the stipulated time frame to avoid legal repercussions.