Lenders are required by law to notify applicants about loan approvals, denials, and counteroffers to ensure transparency and fair lending practices.
A lender must notify applicants of all of the above credit outcomes: loan approvals, loan denials, and counteroffers. According to the Equal Credit Opportunity Act (ECOA) and the Fair Credit Reporting Act (FCRA), these notifications are required to ensure fair lending practices and to inform applicants of their credit status and any actions taken on their credit applications.
This notification process allows applicants to understand the decisions made by lenders and, in the case of denials or counteroffers, provides them with information that may be necessary to address any issues or to seek credit elsewhere.
So, transparency in lending decisions is integral to fair and equitable financial processes, and it's a legal requirement for lenders to communicate outcomes to applicants.