Who Can Pull CRA Reports and From Where?

In the United States there are several credit referencing or reporting agencies (CRA). The three most widely recognized ones are Equifax, Experian, and TransUnion. Any vendor who requires a credit report on a customer must pull a CRA report from any or all of the credit reporting agencies.

When a person applies for a credit card, the first thing any creditor or bank will do is to pull a credit check on the person from any of these agencies. If you are not approved for the credit card, you are entitled to know the reason for the disapproval, which agency your credit was pulled from, and also get a free copy of your credit report from that agency under the Fair Credit Reporting Act (FCRA) guidelines.

How the CRA's Work

All three credit reporting agencies use the same or similar methods to work out your credit score. The formula for the computations involved in determining the credit score come from the Fair Isaac Corporation (FICO). The range of the score varies from 300 (the lowest) to 850 (the highest). In 2006, VantageScore Solutions was formed as a competitor to FICO and the credit reporting agencies started using their computational method. The credit scores as reported by VantageScore ranged from 501 (the lowest) to 990 (the highest) and were graded in alphabets.

All three credit reporting agencies use the same algorithm to calculate the VantageScore whereas they use different algorithms to arrive on a credit rating based on the FICO score. As more and more lenders pull CRA reports from the three bureaus, it has become the source of confusion for the consumer as well as the vendors who might not know of the two distinct scoring methods.

Recently FICO '08 was released which is a new formula designed to differentiate between those with a good credit history but struggling and those who are a definite credit risk. The new formula is also supposed to be fairer in its scoring method. It is able to differentiate authorized card users from those who are 'piggy-backing' or scamming the system by tagging on to a person with good credit.

How To Determine Who Pulls Which CRA Reports

Most people do not really bother about which vendor pulls their credit reports. Although it is important to note that there are only a few agencies which can pull your credit report by law. Banks and mortgage companies, employers, insurance and credit card companies, and utility companies are allowed to pull your credit report when they want to verify your identity for opening an account or giving you a job. Since these are the only companies that can request a credit check on you, it is important for you to know who pulls your CRA reports and from which agency. If you are denied credit by any of the above, you must be informed of which credit reporting agency was used.

This practice has a couple of advantages. For example if you were denied credit by a credit company and you were subsequently informed by them that your CRA report was pulled from one of the credit bureaus, say Experian, you have the choice to apply to any other credit card company that pulls the credit report from Equifax or TransUnion. This will ensure that there is a lesser chance of your application getting rejected if you apply elsewhere and secondly, you can order your credit report from Experian to check for any inconsistencies or errors.

If you know who pulled your CRA report and from where, you have the information and the ability to correct any errors on your credit report. This by itself is a big benefit and an important one in today's times.