U.S. federal law - specifically Regulation B which implements provisions of the Equal Credit Opportunity Act, and the Fair Credit Reporting Act - requires that creditors must notify any consumer or business applicant for credit with the reasons why adverse action is taken on either an application or an existing account. Adverse action includes, but is not limited to, the denial of credit, account termination, denial of a credit limit increase, etc.
This Notice of Adverse Action is required to be sent within 30 days of receiving a credit application but creditors have standardized it to 7-10 business days. The notice typically provides four key factors explaining the adverse action but sometimes a fifth key factor is included if it relates to the number of inquiries on the applicant's credit report, and inquiries were not covered in the first four factors. (BTW, this explains why you are never informed of adverse action by phone or email).
The notice also includes the name of the credit reporting agency that provided the information used to make the decision, and gives the applicant a 60-day window to obtain additional information from the CRA and to begin correcting any erroneous information on record with that agency.
