How to Read a Credit Report Before Buying a Mercedes-Benz

There are certain numbers that have a great impact upon a person’s life. Dieters look at the numbers on a scale with both a little fear and a lot of hope. Race car drivers look for the speedometer to hit that all-special winning number. Students handing in that mid-term paper keep looking of that high 90s number or that most-of-the-time elusive three-digit 100. There is another three digit number of great importance you need to know when buying a Mercedes-Benz luxury car. That number is your credit score. Unless you have unlimited wealth, you more than likely will need to borrow a certain amount to make the purchase of a new Mercedes-Benz. Your score is an indication of your credit worthiness based upon the data it contains and reveals through specific analysis. The three-digit score helps lenders evaluate your potential risk in what is substantially an objective method. The interest rates paid on a loan and the very “if” you are granted credit in the first place is dependent upon your credit score. The score is determined base upon values assigned to a certain set of variables appearing in the credit report. Then, a mathematical equation calculates that three-digit number giving every variable a specific weight in accordance with its importance. Your FICO score is the most common assessment used to determine the score. The Fair, Issac and Co. score, established in 1956, has become the industry standard for consumer credit risk assessment in the U.S. Automobile financers also depend greatly upon FICO. There are five factors that play a role in your FICO score including: • Payment HistoryrnThis has a 35 percent impact upon determining your total credit score. Information concerning your mortgage, installment loans, retail and credit card charge cards payment history play important roles here. • Current Outstanding BalancesrnYour outstanding balances owed to creditors makes up an additional 30 percent for your credit score. Owing a good amount on all of your accounts does not necessarily go against you. However, if that amount is close to your limit it will. • History LengthrnAbout 15 percent of your credit score is determined by the length of your credit history. Unfortunately, if you are just starting out on your credit life there will be nothing you can do to alter this. • New CreditrnAny recent credit you have acquired will constitute 10 percent of your credit score. Therefore, stay away from applying for many new accounts since this will impact your score adversely. • Type of CreditrnThe types of credit you use make up another 10 percent of your score. The concern here is that a borrower has a good mix of finance company accounts along with credit and retail store charge cards, installment loans and mortgages. This factor has little weight placed upon it if your FICO score has full information from the above four.