Credit Basics

Determining Your Credit Standing.

Many people think that credit reports and credit scores are one and the same. In fact, a credit score is derived from the information contained in credit reports - and your credit score determines your credit standing.

When you hear the term "credit score," people are usually referring to your Beacon score - a scoring formula for assessing credit risk. Different retail and commercial organizations evaluate your "credit worthiness" using Beacon scores from the credit reporting bureaus, as well as some of their own scoring criteria. For example, while Mercedes-Benz Financial Services uses the services of the different credit reporting bureaus, we have our own formula to derive your credit "score" to determine whether you qualify for financing through Mercedes-Benz Financial Services.

Just as your credit history can be different when reported through different bureaus, your credit score can also differ at any point in time, since it is based on many different factors that include:

  • Your history of making scheduled payments
  • The amount of outstanding debt you have
  • The duration your credit history spans
  • The number of credit inquiries that have been made on your account and the type of inquiries made
  • The kinds of credit you have been awarded (bank cards vs. store specific cards vs. loans, etc.)