If a borrower's loan application is denied due to credit score issues, what must be provided?

When a borrower's loan application is denied because of credit score issues, it is essential to provide an adverse action notice. This requirement is established under the Fair Credit Reporting Act (FCRA) and Regulation B of the Equal Credit Opportunity Act (ECOA). The adverse action notice informs the borrower of the specific reasons for the denial. It must include information about the credit score used in the decision process and the borrower’s right to obtain a free copy of their credit report. This notice is crucial as it helps ensure transparency in lending practices and allows the borrower to understand and potentially rectify the factors that led to the denial.

While providing a copy of the credit report can be important for the borrower to see what issues may exist, the primary requirement following a denial due to credit issues is the adverse action notice itself, which encompasses an explanation of the denial and alerts the borrower to their rights. Loan options for other products and alternative lenders, although potentially useful information for the borrower, are not mandatory disclosures in response to the denial based on credit score issues.