In laymens terms your credit score is an indicator of how "credit worthy" you are.

What contributes to this score?

Well lots of things, here are some of them:

How much credit do you really need?

Have to much credit is a negative, especially when you can't afford it, but having too little is also bad for you. You can't have a credit rating if you don't have any credit.

I would suggest you want to be regularly using between 25-30% of your available credit (overdraft and ccs). If you have credit available to you that you hardly use then future credit providers won't be willing to give you more credit ('he doesn't need this extra credit, he isn't using the credit he's got').

Use too much though and it looks like you rely to much on credit in which case you're a risk.

I found my credit score got better when I increased my credit limit on my card so that my monthly spend was about 25% of the total. I also cancelled other cards that I didn't use as much.

How do you use the credit you have?

If you pay off the minimum agreed amount of your credit then you won't have any black marks on your credit score. However your score will still be affected.

Credit companies make more money on interest and processing payments than they do on penalising people for missing payments etc. Its a myth that credit companies want you to fail to pay them back. If you have thousands of pounds on your credit card and only pay back £5 minimum payment every month then you pose a higher risk to credit companies. It looks like you can't afford the money you've borrowed and leaving large amounts stagnant will drop your score.

Credit scores don't record what you buy. But your credit has a type. (I. E. Credit card, car loan, mortgage etc). If you have 3 credit cards this will be worse than having 1 cc, 1 car loan and 1 mortgage. This is because lenders can see that you're using your available credit wisely. Someone with a whole bunch of credit cards with presumably a high Apr isn't going to pay your car loan back first when they overspend on their cards.

How much credit are you applying for.

Credit checks get marked on your credit report. Not all credit checks are bad, but the amount of full searches you have will count against you in some situations.

This is for many reasons but mostly 2:

1. The more credit you're applying for the less specific your needs and the more desperate you appear. If you're buying something you can't afford them you should be looking at all the options and choosing wisely, not just applying everywhere and seeing who bites.
2. If you get turned down for credit that rings alarm bells at other credit companies. If you have a whole bunch of credit checks and no credit to go with them then there must be a reason.

Who else is associated with you and how is their credit?

You want to check your credit report. If you are living with someone or share a bank account or bought a car together or anything similar then there's a chance you'll be associated on your credit report.

If this is the case then there is a chance their credit report might be affecting yours. This shouldn't be a massive issue unless they're really in the shit, but its still definitely worth checking.

You also want to check your report to make sure its accurate and up to date regularly.

I use noddle. They're the cheapest and have a freemium service if you don't want to pay.

Now I am no expert in this matter but this is what I know from my casual research online. There's loads of information out there if you have a look around.

Want to improve your credit rating?

The only way to improve your credit rating is to get some credit and use it wisely. Be careful - it goes without saying that more credit increases the risk of debt.

An easy way to get a better credit rating is to get a credit card and use it regularly. If you currently have a debit card then just start using the credit card in place of that debit card. When you get the card, phone up the provider and ask them to set up a direct debit for the full amount every month so it pays itself off automatically.

Money saving expert is a great website which will have more tips like this and give you a good idea of credit cards you could have. Have a look there.