Think of your credit rating as your financial footprint.

Your credit rating, or credit score as it's sometimes known, is essentially a record of all of your past dealings with credit, bills and any kind of payments.

All of these dealings are listed on your 'credit report', from loan repayments to library fines, and are turned into a numerical score.

It is important to note though that your actual credit 'score' will vary depending on where you found it out, and so it's better to think of it in terms of a scale from 'excellent' to 'very poor', rather than as an actual numerical value.

Having a great credit rating is essential if you want to take advantage of not just the best straightforward personal loans available, but also things like credit cards and mortgages.

A poor credit rating will be a hindrance throughout your financial life and so it's important to be aware both of what your rating is, and what kinds of things will affect it.

Importantly though, when you apply to take out a loan, your credit rating is only a part of the story - you will find that even with a near perfect rating, you might get turned down, and that with a poor or limited rating, you could still be accepted. Make sure you find out as much as you can about the lending criteria before you apply so that you can make sure that you're fully prepared.

There are three major credit checking agencies in the UK:

- Experian

- Equifax

- Call Credit

All three of these offer paid services that allow you to view your credit report in full, including the score or value they give it.

Some banks are now offering free access to your credit report when you open certain accounts with them so if that sounds like something you'd be interested in, then make keep an eye out when you're looking for your new account.

There are a whole host of things that can negatively affect your credit rating, from basic things like missed bill payments, to more surprising things like applying for mortgages.

Even accessing your credit report will have an impact on it, so it's something you should avoid doing too often.

One of the biggest reasons why younger people tend to have poorer (or at least, less than excellent) credit ratings is because in order to get the best rating, you need to have a history of borrowing money and paying it back on time. If you've never really borrowed before, your credit report won't look as good as someone's who has.

Things that will really look bad on your credit report are things like missed or late payments (for loans, bills, or anything), defaulting on any loans and, by the same token, any kind of insolvency or bankruptcy.

Since your credit rating, and the report that it is based on, is simply a record of your financial history, the most straightforward way to imrpove your credit rating is, rather simply, to make sure that you keep up to date with any payments you have, and show yourself to be a viable candidate for any potential lender.

However, different lenders like different things and so as we’ve said, when it comes to individual applications, there’s no ‘one size fits all’ answer as to how to make yourself more attractive.

One way to start making headway into improving your credit rating is to take out a specialised ‘credit building credit card’. These cards work in much the same way as a conventional credit card, only they come with typically lower spending limits and high APR, giving you increased incentive to make sure you pay off the balace in full eah month.

By using one of these cards, over time you will demonstrate your ability to use credit responsibly, and this will be reflected on your credit report.