Lenders use credit scores to assess the risk that you will not repay what you owe. A credit score is a mathematical calculation based on information from two main sources your credit report and your application. Each piece of information is allocated a value and each lender uses its own formula to calculate a number that represents the risk you represent. Sometimes the same lender will use a different formula for different products, for instance a car loan versus a mortgage.

In general, the higher the score, the better your chance of getting credit on favourable terms.

Your first step towards improving your credit score is to check your credit report to make sure that it is up to date and accurately reflects your circumstances. If you find anything that is out of date or that you believe is inaccurate, contact the lender or court that supplied the information, giving proof if possible, and ask them to make an amendment.

If there’s something that needs further explanation, you may be able to add a note of explanation that lenders may take into account. You should also check that you are registered to vote at your current address, as lenders use the electoral roll to verify your identity. You could lose points if you don’t appear or are down at an old address.

I have some large credit card debts and was thinking of transferring them to another credit card company offering 0 per cent on balance transfers. Will this affect my credit rating

This is called credit card surfing shifting your balance from one card to another to take advantage of introductory interest-free or low-interest offers. It should not harm your credit rating, as long as you always make your repayments on time and don’t do it too often.

Remember that your application for a new card might not always be accepted and that lenders dont like to see evidence of a series of applications on your credit report they can think you are desperate for money or even that a fraud is being planned.

You can see your Experian credit report for free with a 30-day trial of CreditExpert.