How do I write an Adverse Action Letter?

After you run a credit report for potential tenants, the next step is to actually decide who you want to move into your rental. While you need to steer clear of rejecting anyone based on race, religion, disability, or sex, Fair Housing Laws state that you CAN deny a tenant for reasons related to criminal history and bad credit scores or a history of bankruptcy.  

If you decide to reject an applicant due to the information you receive from a screening report, you’re legally obligated to write them a letter explaining why. If you don’t, you’re in danger of violating the FCRA (Fair Credit Reporting Act).

To cover all your bases, an adverse action letter must include the following info:

- Contact details for the credit reporting agencies and screening facilitation companies (i.e. TransUnion) that provided information so that an applicant can obtain a free copy of the credit report used to make a decision.

- A notice to an applicant that they have the right to dispute the accuracy of the information provided by the agency and can receive a free report from the agency upon request within 60 days.

- A statement declaring that the agency that supplied the report did not make the decision to take the adverse action and cannot give the specific reasons for it.

It’s best to provide the letter in writing, but whether you send it electronically via email or mail a physical copy, make sure to keep a dated copy for yourself.

For more information on the FCRA and Adverse Actions Letters, check out the Bureau of Consumer Protection’s website.

Last updated:
Aug. 1, 2023