---
term: "Adverse action notice"
category: "Evidence and audit"
url: https://agenticopenfinance.com/glossary/adverse-action-notice
source: AgenticOpenFinance glossary
---

# Adverse action notice

> A US notice telling a credit applicant about an adverse decision and the specific principal reasons for it.

Under the US Equal Credit Opportunity Act and Regulation B, a creditor that takes adverse action, such as declining an application, must notify the applicant and provide a statement of the specific principal reasons or disclose the right to receive them. The CFPB has stated in a circular that creditors using complex algorithms must still give specific and accurate reasons, and cannot rely on sample checklist reasons that do not reflect the actual ones. An agent involved in credit decisions must therefore produce reasons a person can verify.

Related terms: [Explainability](https://agenticopenfinance.com/glossary/explainability.md), [Automated individual decision-making](https://agenticopenfinance.com/glossary/automated-individual-decision.md), [High-risk AI system](https://agenticopenfinance.com/glossary/high-risk-ai-system.md), [Audit trail](https://agenticopenfinance.com/glossary/audit-trail.md)