Adverse Action Letter Template for Rental Applications (United States)

What an adverse action notice is

An adverse action notice tells a rental applicant that you turned them down, or approved them only on tougher terms, and explains their rights when a consumer report or score was part of that decision. The requirement comes from the federal Fair Credit Reporting Act. The idea is simple: if information in a report about someone hurt their chances, they deserve to know where it came from and how to check it.

When you must send one

Send a notice whenever both of these are true:

1. You took an adverse action: you denied the application, or you approved it but asked for more than you offered, such as a higher deposit, a cosigner, a guarantor or higher rent.
2. Information from a consumer report played any part. That includes credit reports, tenant screening reports, eviction history reports and criminal background reports from a screening company, and credit scores.

If the decision rested on information from a person or company that is not a consumer reporting agency, such as a past landlord you called yourself, a separate disclosure applies (Part 3 of the template).

What the notice must contain

When a consumer report was used, the notice must tell the applicant:

• That you took adverse action.
• The name, address and phone number of the consumer reporting agency that supplied the report. If that agency compiles and keeps files on consumers nationwide, give its toll-free number.
• That the agency did not make the decision and cannot explain why it was made.
• That they can get a free copy of their report from that agency if they ask within 60 days.
• That they can dispute the accuracy or completeness of anything in the report with that agency.

When a credit score was used, also give:

• The score, and the range of possible scores.
• Up to four key factors that hurt the score, or five if the number of inquiries was one of them.
• The date the score was created and who provided it.

When information from another source was used, tell the applicant they may make a written request within 60 days to learn the nature of that information, and answer within a reasonable time.

How to use the template

1. Tick the decision that applies and describe any conditions.
2. Fill in the reporting agency’s details from the report itself.
3. Complete the credit score section only if a score was used.
4. Complete Part 3 only if outside information played a part.
5. Add reasons from your written criteria if you choose to, or where local law requires them.
6. Send it promptly and keep a copy with the application and the delivery record.

Fair housing and good practice

• Use written criteria for income, credit, rental history and background, and apply them to every applicant the same way.
• Check local rules. Some states and cities limit the use of criminal records, eviction records or credit, cap application fees, protect source of income or require individual review before a denial.
• Protect the report. Store consumer reports securely and dispose of them safely when you no longer need them.

Common mistakes

• Sending nothing when approving with conditions. A higher deposit because of a report is still adverse action.
• Leaving out the agency’s contact details or the free report and dispute rights.
• Forgetting the credit score disclosures when a score was used.
• Giving reasons that are not in your written criteria.

Screening in TenantLoop

In TenantLoop, applicants apply online and every application sits on one record. Screening runs through TransUnion SmartMove from the application, and the decision stays yours. Keep the notice you send with the application record so the full history of the decision is in one place.