Adverse action notice for landlords: what to send after a screening denial

The short version

If you use a tenant screening or credit report and then deny the application—or approve it only with tougher conditions such as a co-signer, a larger deposit, or higher rent—federal law requires an adverse action notice. Put your rental criteria in writing first, apply the same criteria to every applicant, decide against those criteria, and send a notice that includes the reporting company’s contact information and the applicant’s rights to a free report copy and to dispute errors. Keep a copy with the application file. Rules vary by state and city, so check your state’s rules.

When this notice applies

Send an adverse action notice when a consumer report contributed to a decision that is adverse to the applicant. Common landlord examples:

• You deny the rental application.
• You approve only with a co-signer or guarantor.
• You require a larger security deposit than other applicants.
• You quote a higher rent than other applicants.
• You withdraw an offer or change terms after reviewing a report.

A “consumer report” here includes tenant screening reports and credit reports from a consumer reporting agency. Get signed written consent before you run a report, and use reports only for a permissible purpose under the FCRA (15 U.S.C. 1681b).

What “adverse action” means under the FCRA

Under 15 U.S.C. 1681m, if you take any adverse action with respect to a consumer that is based in whole or in part on information in a consumer report, you must give the consumer notice. 15 U.S.C. 1681a defines “adverse action” broadly to include decisions that are adverse to the consumer’s interests in connection with an application they made. For rental housing, that covers denials and the kinds of conditional approvals the CFPB calls out (co-signer, larger deposit, or higher rent). The notice can be oral, written, or electronic for the adverse-action statement itself; written or electronic is the practical choice for landlords who need a record.

What the notice must include

The FCRA (15 U.S.C. 1681m) requires these disclosures when a consumer report played a part in the adverse action. Your notice must cover:

• That you took adverse action (for example, denial or approval with stated conditions).
• The name, address, and telephone number of the consumer reporting agency that furnished the report (including a toll-free number if the agency maintains files nationwide).
• A statement that the reporting agency did not make the decision and cannot explain why it was made.
• The applicant’s right to obtain a free copy of the report from that agency within 60 days.
• The applicant’s right to dispute the accuracy or completeness of information in the report with the agency.
• If you used a numerical credit score in taking the adverse action, a written or electronic disclosure of that score and the related score information required by 15 U.S.C. 1681m (including the score, the date it was created, the range of possible scores, and the key factors that adversely affected the score).

Many landlords also state, in plain language, which written rental criteria the application did not meet. That is good practice for consistency and fair housing records; confirm whether your state or city requires a statement of reasons.

Before you send: a short checklist

• Confirm you have signed screening consent and that you used the report for a lawful purpose.
• Decide against your written rental criteria, the same way you decide for every other applicant.
• Note on a decision sheet what the report showed and which criteria drove the outcome.
• Fill in the reporting company’s exact name, address, and phone from the report or the company’s site.
• If a credit score was used, pull the score, date, range, and key factors from the report so the notice is complete.
• Send the notice when you take the action; keep a dated copy with the application, consent, report, and decision notes.
• Store screening reports securely and limit who can see them; dispose of them safely when you no longer need them under your state’s rules.

Common mistakes

• Denying someone because of a report and never sending a notice.
• Approving with a co-signer or higher deposit because of a report, and treating that as “not a denial” so no notice goes out.
• Naming the wrong screening company, or leaving off address and phone.
• Telling the applicant to “call us for details” instead of stating that the reporting agency did not make the decision.
• Changing criteria mid-search for one applicant, then struggling to explain the denial.
• Keeping no copy of the notice, so you cannot show what was sent.

Fair housing note

The federal Fair Housing Act (42 U.S.C. 3604) makes it unlawful to refuse to rent, or to set different terms, because of race, color, religion, sex, national origin, familial status, or disability. It also bars ads and statements that show a preference based on those characteristics. Many states and cities add more protected classes, such as source of income. Written criteria applied the same way to every applicant—and a consistent adverse action notice when a report affects the decision—help you show the outcome followed the criteria, not a protected characteristic.

Optional paid guide

The free checklist above covers when to send an adverse action notice and what it must include. The Tenant Screening Playbook ($15) is a longer guide on the same screening steps. It adds editable templates (a rental criteria template, a pre-screen script and inquiry log, a landlord and employment verification form, a screening decision sheet, a criminal history individualized assessment, and an adverse action notice), worked examples, a fair housing quick reference, and a check-your-state lookup sheet. Get it only if you want those extras.

• Tenant Screening Playbook ($15) — write fair criteria, verify income and history, and document every decision

Related free checklists

• Tenant screening checklist — 10 steps from written criteria to records
• Rental application form (free PDF) — what to ask, consent, and what to leave off
• Screening tenants with pets
• Rental showing checklist
• First-time landlord checklist
• Lease review checklist (free PDF)

Official sources to check

• 15 U.S.C. 1681m (Cornell LII) — FCRA duties of users taking adverse actions
• 15 U.S.C. 1681b (Cornell LII) — permissible purposes for using a consumer report
• 15 U.S.C. 1681a (Cornell LII) — FCRA definitions, including adverse action
• CFPB: What is a tenant screening report? — what reports contain and rights when housing is denied
• CFPB list of consumer reporting companies — tenant screening companies; conditional-acceptance notice note
• CFPB Regulation V, Appendix N — Notice of User Responsibilities
• 42 U.S.C. 3604 (Cornell LII) — Fair Housing Act: discrimination in rental
• USA.gov: find your state attorney general — state consumer-report and landlord-tenant rules
• USA.gov: find legal aid