Adverse action: the “why you were denied” screen

ECOA / Regulation B — 12 CFR 1002.9(b)(2); FCRA §615(a)/(b) — 15 U.S.C. 1681m

• Under Reg B, disclose the principal reasons for the adverse action. Generic statements — “internal policy”, “you didn’t score high enough” — are explicitly insufficient; the reasons must reflect the factors actually weighed.
• Under FCRA §615(a), if the decision used a consumer report, give the reporting agency’s name, address, and phone; a statement that the agency didn’t make the decision; and the person’s right to a free report and to dispute (within 60 days).
• If a credit score was used, disclose the score, the range, the key factors, and the date (Dodd-Frank amendment to FCRA).
• CFPB guidance (Circulars 2022-03 and 2023-03): using AI or a complex model doesn’t relax any of this — reasons must be specific even when the model isn’t directly interpretable.

The regulations dictate which facts must be communicated, and by when. They don’t dictate the screen layout, the tone, the ordering of reasons, or whether the notice is in-product, emailed, or mailed — any timely written form works.

• The reason list is content, not chrome — it needs first-class hierarchy, not an accordion or a footnote.
• Reasons must be phrased as the factor actually used (“balances on revolving accounts too high”), never as internal policy language or a bare score.
• The decision screen and the formal notice can differ in format but must carry the same substance — design them as one system.
• A model-driven decline still needs human-legible reason codes; the design can’t hide behind “the algorithm decided”.
• Approved-but-worse-terms needs its own path (a risk-based pricing notice), not the same screen as a flat approval.

• Decision statement (denied / counteroffer / approved with conditions)
• Principal reasons — a short ranked list in plain language
• Credit-bureau block: agency contact, “they didn’t decide”, free-report and dispute rights, the 60-day window
• Credit-score block where a score was used
• Next steps — what the person can do now (reapply timing, add a cosigner, dispute report errors)
• The formal notice (email / PDF / mail) mirroring the above

Adverse-action defects are among the most common ECOA/FCRA exam findings and a frequent basis for CFPB enforcement and class litigation; FCRA carries statutory damages.

• CFPB — Regulation B § 1002.9 (Notifications) and Official Interpretations
• FTC — Using Consumer Reports for Credit Decisions: Adverse Action and Risk-Based Pricing Notices
• CFPB Circular 2023-03 — Adverse action notification requirements and complex algorithms

Last reviewed 2026-08-28. Verify against the primary source before you ship.