What Is An Adverse Action Notice?Adverse Action Notices are utilized to inform consumers they’ve been denied credit, employment, insurance, or other benefits based on credit reports or background check information. These notices are required to be sent out within 30 days of receiving a complete credit application.

In terms of employment, when screening an employee, a background check can affect someone’s employment. This not only applies to new hires but also for denying promotions or transfers to existing employees.

If you screen a job candidate and uncover that you need to execute an Adverse Action, you must complete three steps to follow the Fair Credit Reporting Act (FCRA) Adverse Action process.

1. Pre-Adverse Action Notice

Provide the candidate a notice that you are not able to move forward with the employment process based on information found in their background report. Be sure to list the reason behind the Adverse Action Notice. This pre-notice allows the candidate an opportunity to respond to the information given. It is important to include a standard document called “A Summary of Your Rights Under the FCRA,” in your Pre-Adverse Action Notice.

2. Waiting Period

The FCRA requires a waiting period designed to allow candidates to come forward and dispute any incorrect or outdated information or provide additional information to consider. There is no set number of days required to wait – but generally, seven days is a standard timeframe. Multiple cities have their own required waiting period so ensure you research before moving on to another candidate. If the applicant ends up not providing supplemental information, you can then send the Post-Adverse Action Notice.

3. Post Adverse Action Notice

Once the waiting period is complete, you must provide a final notice if you’ve decided not to move forward with the candidate.

  • Include the name and contact information for the consumer reporting agency that triggered the Adverse Action process.
  • A statement advising the candidate that the consumer reporting agency did not make the decision and cannot provide reasons why the Adverse Action was made.
  • Notification that the candidate or employee is allowed a free copy of their background check within 60-days.

In terms of credit, an Adverse Action Notice is sent to inform consumers who have credit-related requests information regarding a variety of decisions. These include credit denial, interest rate increase, credit limit reduction, denial of increase, or account suspension or closure. Any time a lender needs to alert a customer of a negative decision related to credit, the consumer is required by law to receive an oral, written, or electronic notice of the determination.

Included in the action letter you can find your credit score along with the date pulled. Also included is the name, address, and contact information of the reporting agency that supplied the utilized credit report. Additionally, you’ll see up to five reasons for the denial along with the notice of the right to a free copy of your credit report within 60 days from the credit bureau and how to receive that copy.

There are multiple reasons an application can be denied by a lender including,

  • Credit score not meeting minimum lender requirement
  • Debt to income ratio is too high
  • Not enough credit history
  • Multiple late payments
  • Too many recent credit inquiries
  • High credit utilization ratio
  • Too much existing credit with lender
  • Bankruptcy
  • Collection or charge-off accounts

It is important to note that adverse action notices do not harm the applicant’s credit score or appear on their credit report unless the creditor pulls a hard inquiry.

Sending an Adverse Action notice anytime an applicant has been denied credit, employment, insurance, or other benefits based on credit reports or background check information is required by law. Stay on top of notifying candidates by having a template in place to streamline the Adverse Action process.

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The Four Best Ways to Protect Your Rental Property InvestmentRental properties can often seem like one of the easiest ways to make money. But like any investment, they come with pros and cons. When renting out a property, it is important to protect yourself and your property from everything from physical damage to insurance claims.

    1. Get a Robust Insurance Policy

      Basic landlord insurance isn’t enough when protecting your rental asset. Having coverage that provides protection from all types of potential losses is ideal for property owners looking for maximum coverage. We recommend insurance that covers you from the following losses at a minimum, including property damage, liability coverage, and loss of rental income from rent not received.

      With a full umbrella policy, you receive an additional layer of coverage after your other policies have reached coverage limits. An umbrella policy protects landlords against tenant claims, guest injury, or even injuries suffered by a squatter in your vacant property. If you are a landlord with multiple rental properties across multiple destinations an umbrella policy could be for you.

    2. Create A Strong Lease

      Though it is easy to make a one-time templated lease, it is important to customize your lease to make it as strong as possible. Your lease should cover federal, state, and local laws along with your specific rental terms and requirements. Stay up to date with local laws by visiting your city government’s website to look for residential landlord and tenant ordinances.

      Be specific about rental terms including length, lease start and end, residents’ names, co-signer’s names, maximum occupancy, rent amount, due date, late fees, rent payment instructions, and security deposit amount. The lease contract should also touch on additional fees for pets, move-ins, utility costs, utility setup, and maintenance protocols. Having a customized lease for every tenant and property is ideal for laying out expectations and mitigating problems before they occur.

    3. Purchase A Home Warranty Plan

      Save money on repairs and maintenance with a home warranty that prevents you from unexpected costs at your rental property. A home warranty covers repairs, maintenance appointments, replacement items, and more to save you time and money. Be sure to always read the fine print when choosing a warranty plan so you know what is covered and what is not.

    4. Avoid Additional Risk

      Implementing a tenant screening process or software can help landlords avoid risk. With an applicant screening service, you can run credit reports, review background checks, and request references from the applicant so you have the best understanding of a person’s background. Always ensure your vendors have references and documentation of proof of insurance before ANY work is started on your rental property. Avoid risk by keeping uninsured contractors away from your property and tenants to lessen your chances of being liable for damages or potential injury.

Selecting a combination of strategies is your best bet to protect your rental investment. Most long-term rental property owners do the above things to ensure their investment is protected. It isn’t easy to factor in unexpected costs from the get-go but with a strong plan in place your property is ready for anything.

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4 Reasons You Should Screen Tenants

April 11, 2022

Creating a consistent and in-depth screening process is one of the best ways to make an informed decision when choosing your next tenant. Minimize the risk of late payments, non-payments, property damage, and evictions by enforcing a thorough screening process for all potential tenants. If you’re consistently dealing with difficult residents, it’s possible that your […]

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New COVID-19 Aid Package Includes Rental Assistance

December 21, 2020

Congress is set to pass the long-awaited second stimulus and COVID-19 relief package. This time, the bill includes $25 billion in funding for rental assistance to help support landlords and tenants. The new measure comes as an estimated 12 million renters will owe $6,000 or more in back rent and utilities by the end of […]

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Eviction Moratoriums Extended

December 21, 2020

Landlords who were awaiting the December 31 deadline for eviction bans to end will be stuck for longer as federal, state, and city lawmakers work to extend tenant protections into 2021. The federal relief bill just passed by Congress includes an eviction ban until January 31, 2021. If the language of that relief bill mirrors […]

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Hope on the Horizon: What Landlords Can Expect in 2021

December 21, 2020

With the ongoing vaccine rollout and a new stimulus and relief deal in Congress, there is hope on the horizon that 2021 will bring an end to the economic pain brought on by the pandemic. Businesses can reopen, renters can get jobs, and landlords can get paid. But there’s no question that COVID-19 has had […]

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2021 the Year of Lease Incentives

December 21, 2020

Rent incentives are back, and tenants can find them in cities across the country. Many Seattle landlords currently are offering six weeks free rent. New York City tenants can expect two free months. Same in Philadelphia and Boston. Washington, D.C. landlords are competing with less cash at move in, eight weeks of free rent on […]

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Tenant Scams 11 Landlords

December 14, 2020

At least 11 Toronto-area landlords are suffering income loss after the same tenant scammed them using a fake name. According to this news report, the tenant provided documentation under an alias name to secure leases on multiple properties.  The tenant allegedly sublet each of the luxury properties and collected rent. Some of the properties suffered […]

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How to Make the Most of a Tenant Credit Check

December 14, 2020

Running tenant credit is the final step in the tenant screening process. This information helps landlords: Uncover tenant fraud including identity theft and false identity; Confirm the applicant’s qualifications; and, Gain leverage for on-time rent payments. A credit report may prove a tenant’s habit of paying their bills on time. Conversely, the credit report may […]

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Vancouver to Increase Vacancy Tax

December 14, 2020

Citing the apparent success of the Empty Homes Tax in creating more rental housing, Vancouver lawmakers voted to increase the tax in 2021, sending an “even stronger message” to owners of vacant properties. This vacancy tax currently is set at 1.25% of the property’s assessed value. The new amendment raises that figure to 3%. The […]

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