Your decline letter, translated
The letter a lender must send when it declines you states the principal reasons, the bureau used, your score and your rights. How to read each section and translate the standard phrasing into what to fix.
Applying6 min readUpdated 15 September 2026By the MDG Lending Team
The short version
- An adverse action notice states the principal reasons for a decline, and the law requires them to be accurate rather than generic.
- It also names the credit bureau used and entitles you to a free copy of that report for 60 days.
- The standard phrasing maps onto specific fixes: an untraceable income, a thin file, a payment that does not fit.
- It is the only free, personalised diagnosis of your credit position you will be handed. Read it.
What the letter is, and why you got it
An adverse action notice is a letter a creditor must send when it declines an application, offers worse terms than you applied for, or closes or reduces an existing account. The requirement comes from the Equal Credit Opportunity Act and the Fair Credit Reporting Act, and it exists for one reason: so that a decision about your money is not made behind a curtain.
Most people file it away unread, which is a mistake. It is the only document that tells you exactly what to change, written by the organisation that made the decision, and the law requires the reasons to be accurate rather than generic.
You should receive one when
- An application is declined.
- You are approved, but for a smaller amount or worse terms than requested.
- An existing account is closed or its limit is cut.
- An offer already extended to you is withdrawn.
Reading it, section by section
Four parts, and each one is useful for a different reason.
The principal reasons
Usually up to four, in order of weight. These are the specific things to act on, not a general statement about your creditworthiness.
The credit bureau used
Named with contact details, plus your right to a free copy of that report within 60 days. Take it: errors are common.
Your score, if used
The score, its range, the date, and the key factors that held it down. This is the closest thing to a free diagnosis you will get.
The ECOA notice
A statement of your right not to be discriminated against, and the federal agency that supervises the lender. That is who to contact if you believe you were.
Common reasons, translated
The phrasing is standardised, which makes it precise but not always plain.
| What it says | What it means | What to do |
|---|---|---|
| Unable to verify income | Your deposits do not show the income you stated | Apply with the account your income lands in, or supply statements or tax returns |
| Insufficient credit history | Your file is too thin to assess, not necessarily bad | A secured card or credit-builder loan, then reapply in six months |
| Delinquent past or present obligations | Late or unpaid accounts are showing | Check the report for errors first, then address what is genuinely owed |
| Level of debt to income | The new payment does not fit alongside existing commitments | Request a smaller amount or a longer term |
| Too many recent inquiries | Several applications in a short window | Stop applying for 3 to 6 months and let them age |
| Unable to verify identity or residence | Details did not match the records checked | Usually a typo or an old address. Correct it and contact support |
Claim the free report
If a credit report was used, you are entitled to a free copy from that bureau for 60 days after the notice, on top of the free reports available at annualcreditreport.com. Errors on credit files are common, and disputing one is free and often moves a score more than anything else you can do in a year.
Questions on this topic
What is an adverse action notice?
A letter a creditor must send when it declines an application, offers worse terms than requested, or closes or reduces an account. It states the principal reasons for the decision, as required by federal law.
How long does a lender have to send one?
Generally within 30 days of receiving a completed application. If you have not received one after a decline, ask the lender for it.
Are the reasons on the notice accurate?
They are required to be. They must state the principal reasons for the decision rather than a generic statement, which is what makes the letter worth reading closely.
Does an adverse action notice go on my credit report?
No. The notice is sent to you and is not recorded on your file. Any hard inquiry made during the application may be recorded.
Can I get a free credit report because of it?
Yes. If a credit report was used in the decision, you can request a free copy from that bureau within 60 days, in addition to your regular free reports at annualcreditreport.com.
What if I think the decision was discriminatory?
The notice names the federal agency that supervises the lender. You can complain to that agency, and to the CFPB. Under the Equal Credit Opportunity Act a lender may not decline you on the basis of race, colour, religion, national origin, sex, marital status, age, or because your income comes from public assistance.
Keep reading
Related guides and the pages that carry the underlying numbers.
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