Regulation B says A creditor must disclose the principal reasons for denying an application or taking other adverse action. The regulation does not mandate that a specific number of reasons be disclosed, but disclosure of more than four reasons is not likely to be helpful to the applicant. We generally tell our clients to go ahead and disclose all the reasons for the denial, but if you want to stop at four, the regulation does allow that. The important thing is that the reasons listed on the adverse action notice clearly communicate to the applicant what they would need to fix in order to possibly qualify for credit in the future. This also means that the reasons you provide are specific. Statements such as “does not meet loan policy”, “credit score too low” or “does not meet our creditworthiness standards” are not specific and likely unhelpful to the applicant.
Jerod explains more in the video.