When Do Landlords Need to Send an Adverse Action Notice?

Landlords need to give an adverse action notice when an unfavorable rental decision is based partly or entirely on a consumer report. That includes more than rejecting an application. Requiring a co-signer or a larger deposit because of the report can also trigger the notice requirement, even if you approve the applicant.

This article explains the U.S. federal Fair Credit Reporting Act (FCRA) basics using fictional examples. It is general information, not legal advice. State and local rules and fair-housing obligations may add requirements or restrict the decision itself. A notice does not make an otherwise unlawful screening policy acceptable.

The trigger is the decision and the report’s role

A consumer report is not limited to a credit report. The FTC includes tenant-screening reports containing rental history, background information, or a screening company’s risk score or recommendation. Its guidance for landlords using consumer reports explains that a notice is required even when report information was only a small part of the adverse decision.

Ask two separate questions: did you take an unfavorable action, and did information in a consumer report influence it? Calling the outcome a conditional approval does not remove the notice requirement. The federal rule is in 15 U.S.C. § 1681m(a).

Three decisions that explain the difference

These scenarios are fictional. They explain the federal notice trigger, not whether a particular screening criterion, deposit, or co-signer requirement is lawful where your property is located.

The FTC also identifies report-based increases in rent or deposits as adverse actions. These examples illustrate why the actual decision matters more than the label attached to it. See the FTC’s adverse action examples for the federal explanation.

What the notice needs to communicate

A message that only says the application did not pass screening is not enough. Under § 1681m(a), the consumer must receive notice of the adverse action and the required information about the report and their rights:

• The name, address, and telephone number of the consumer reporting agency (CRA) that supplied the report. Include the toll-free number when the supplying agency is a nationwide CRA covered by the statute.
• A statement that the CRA did not make the decision and cannot provide the specific reasons for it.
• The right to request a free copy of the report from that CRA within 60 days of receiving the notice.
• The right to dispute the accuracy or completeness of information in the report with the CRA.

The 60-day period is the consumer’s window for requesting that free report. It is not a 60-day allowance for the landlord to delay the notice, and it is not a deadline that cuts off the consumer’s right to dispute inaccurate information.

The federal provision permits oral, written, or electronic notice for these basic items. The FTC recommends written notices as a best practice. Do not confuse that recommendation with the additional written or electronic disclosures required when a credit score was used.

Using a credit score adds disclosures

If you used a numerical credit score in taking the adverse action, § 1681m(a)(2) requires written or electronic disclosure of that score and the information referenced in § 1681g(f)(1)(B) through (E): the possible score range under that model, the key factors that adversely affected the score, the date it was created, and the name of the person or entity that supplied the score or the credit file used to create it.

List the key factors in order of their importance to the score. The statute generally limits them to four; when the number of credit inquiries is a key factor, it must also be included, allowing up to five. These are factors affecting the score, not a substitute for accurately recording your rental decision.

Use the actual score disclosures from the relevant report rather than inventing explanations for the number. Do not assume a screening company’s overall recommendation is the same as a numerical credit score. Confirm what information you actually used and which disclosures apply to it.

Keep the decision, notice, and dispute separate

The housing provider makes the rental decision. The reporting agency supplies the report and handles disputes about its accuracy or completeness. Give the applicant the correct agency contact information; do not present the screening company as the decision-maker or promise that a dispute will produce a particular rental outcome.

As a practical recordkeeping step, document the decision, how the report affected it, and the notice you provided, including its date and delivery method. Limit access to applicant information and follow applicable retention and secure-disposal requirements. During a management change, our handover guide explains how to identify necessary records and arrange a secure transfer.

Have your process reviewed for the property jurisdiction, including fair-housing rules, local screening restrictions, and any additional notice requirements. This article is not a complete screening policy or a ready-to-send legal form. Its central distinction is narrower: an approval can still involve an adverse action when a consumer report leads to less favorable terms.