Adverse Action Notices: When Landlords Must Send One

If you ever turn down an applicant because of something in a screening report, federal law may require you to tell them. That notice is called an adverse action notice. It is easy to send and easy to forget, and skipping it is one of the most common compliance gaps for small landlords. This guide explains when it is required, what it must contain, and how to build it into your routine.

What an adverse action is

The Fair Credit Reporting Act (FCRA) regulates how consumer reports are used. In a rental setting, an “adverse action” is a decision that is negative for the applicant and based even partly on information in a consumer report. Examples include:

• Denying the application
• Requiring a co-signer or guarantor
• Asking for a larger security deposit than you would otherwise
• Charging higher rent than you would otherwise
• Offering a shorter lease or other worse terms than a typical applicant gets

The key phrase is “even in part.” If the credit report, eviction record, or criminal record from a screening company played any role, the notice duty is generally triggered, even if income or references also mattered. The rules are laid out in the FTC’s guide, 15 U.S.C. 1681m (FCRA adverse action notices).

What the notice must include

Our background and credit check guide summarizes the core elements. A compliant notice generally contains:

If the report came from a consumer reporting agency that keeps files on consumers nationwide, the statute also requires that agency’s toll-free number. The underlying law is 15 U.S.C. 1681m. Your screening service should tell you whether the toll-free requirement applies, and most supply a template that already has the right wording. Using their template is the simplest way to avoid drafting errors.

Timing and delivery

The FCRA does not set a stopwatch deadline for landlords in plain terms, but the practical rule is to send the notice promptly after you make the decision, ideally the same day or within a few days. Do not wait until the applicant calls to ask what happened.

The FCRA allows the adverse action notice itself to be given orally, in writing, or electronically, though the FTC notes that credit score information must be given in writing or electronically. Written notice, such as an email or letter, is the safest practice because it leaves a record. Keep a copy in the applicant’s file.

A simple routine

Build this into every denial or conditional approval:

1. Decide based on your written criteria, not on a hunch. See our tenant screening guide.
2. Note in the file which criterion was not met and whether any report information contributed.
3. If it did, send the notice using your screening service’s template.
4. Save a copy of the notice and the date you sent it.
5. If the applicant disputes the report, explain that the agency handles the dispute, and offer to reconsider if a corrected report arrives.

Offering conditional approval, such as with a co-signer or larger deposit, also triggers the notice if it is because of the report. Check your state’s limits on deposits first. Our security deposit guide covers that, and our guide to roommates and co-signers explains how co-signer requirements work in practice.

Common mistakes

• Sending nothing when you reject someone. Silence is the biggest compliance gap.
• Treating a conditional approval as no adverse action. A co-signer or higher deposit demand counts.
• Using a screenshot instead of your own report. A report the applicant hands you is not the same as one you ordered, which makes the paper trail murky. Order your own.
• Applying the rule inconsistently. Offering a fix to one applicant but not another in the same position invites fair housing problems. See our fair housing guide.
• Forgetting about other information sources. Different rules can apply when a decision relies on information that did not come from a consumer reporting agency, such as your own phone call to a past landlord. A separate FCRA provision, section 615(b), lets a consumer request the nature of third-party information within 60 days in some credit situations, but how it applies to rental decisions is not clearly settled. Consider asking a local attorney or landlord association how it works in your state.

State rules and records

Some states and cities add their own requirements, such as extra notice content, written reasons for denial, or limits on what you can consider. These vary widely and change, so check your state attorney general or housing agency website. How long to keep denial records also varies, and your screening service may have its own retention rules. Our record-keeping guide suggests what to save.

Next steps

Before your next vacancy, download the adverse action template from your screening service and save it where you can find it. Add a step to your checklist: after any denial or conditional approval, ask yourself whether a report influenced the decision, and if yes, send the notice that day. Then review your written criteria so every decision traces back to a standard you apply to everyone.