DEFINITION of 'Adverse Action'

An action that denies an individual or business credit, employment, insurance or other benefits. An adverse action is generally taken by a business or government based on a criminal past or information found in credit reports.

BREAKING DOWN 'Adverse Action'

Adverse action is defined in various laws passed by Congress, including the Equal Credit Opportunity Act and the Fair Credit Reporting Act. In the event of an adverse action, applicable law describes the various remedies that may be taken. For example, if a consumer is turned down for a loan because of negative information contained in a credit report, he or she can review the report at no cost.

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