What must consumers be informed of if a negative report affects their application?

Consumers must be informed by the credit reporting agency if a negative report impacts their application because this is a critical provision under the Fair Credit Reporting Act (FCRA). The FCRA ensures that consumers have the right to be aware of any information that may negatively affect their creditworthiness. When a lender decides to take adverse action based on a consumer's credit report, the agency is obligated to provide this notification, often referred to as an adverse action notice. This notice typically includes details about the negative information that impacted the consumer's application, as well as information on how to obtain a free copy of the credit report and instructions on how to dispute any inaccuracies. This transparency helps consumers understand their credit status and provides them with an opportunity to correct any errors, thereby promoting fair lending practices.