When must an adverse action notice be sent after a loan is declined or canceled?

An adverse action notice must be sent within 30 days from the date of a decision to decline or cancel a loan application. This requirement is established under the Equal Credit Opportunity Act (ECOA) and the Fair Credit Reporting Act (FCRA), which aim to ensure transparency and fairness in lending practices. The 30-day timeframe allows lenders to fulfill their obligation to inform applicants of the reason for the adverse action, as well as their right to request the report used in the decision-making process. Compliance with this notice requirement is essential for maintaining trust and accountability in the lending industry, as it helps potential borrowers understand their creditworthiness and any issues that may need to be addressed.