What a credit denial letter must tell you

A letter turning down your application, or cutting a limit or changing terms on an account you have, is called an adverse action notice. Two federal laws decide what it must say: the Equal Credit Opportunity Act (through Regulation B) and the Fair Credit Reporting Act.

When it must arrive

Generally within 30 days after the lender has a completed application, or within 30 days after it takes the action on an existing account.

The reasons

The notice must give the specific principal reasons for the decision, or tell you that you can get them if you ask within 60 days. "You did not meet our standards" is not a specific reason. Reasons look like "too many recent inquiries," "length of employment," or "proportion of balances to credit limits too high." Those words tell you exactly what to work on.

If your credit report played a part

The lender must also tell you:

• The name, address and phone number of the credit bureau whose report it used, and that the bureau did not make the decision.
• That you can get a free copy of that report from that bureau if you ask within 60 days.
• That you can dispute anything in the report that is inaccurate or incomplete.
• The credit score it used, and the key factors that hurt it.

What to do with the letter

1. Request the free report from the bureau named, inside the 60 days.
2. Compare it with what you know. If something is wrong, dispute it; the letter builder writes the letter.
3. If the reasons point to your balances, the utilization calculator shows what paying down would change in the ratio.
4. Keep the letter. If you think you were turned down for a reason the law forbids, such as race, sex, marital status, age, or receiving public assistance, you can submit a complaint to the CFPB.