Whether applying for a zero balance credit card or a quick loan, the candidate in question will need to undergo a credit check.

This will involve providing the lender with a series of personal details, which will allow them to access information about the borrower and their financial history.

With this information, the lender will then score the applicant on a number of key issues.

However, these scoring systems are never published and can vary vastly from lender to lender, often leaving consumers confused about the state of their finances.

To make matters worse, applying (and being rejected) for credit too often can have a detrimental affect on an individual's credit rating, as can applying to view your credit history too often in a short period of time.

So, how is credit rated?

Despite popular belief, there is not one definitive list that holds all UK's residents' credit ratings. Lenders each work out their own ratings based on a series of reference points. Sources of information which lenders most-commonly work from include:

Your salary – if you apply for £100,000, on the basis of paying back £2,000 per month but only earn £15,000 the figures won't add up.

Credit Reference Agencies – Companies such as Equifax compile credit information, such as late payments or defaults. When a candidate applies for credit the lender will check with these agencies what their past behaviour has been like.

Electoral role – This will provide the borrower with your addresses over the years.

Court records – A person in and out of prison is unlikely to be able to make regular repayments.

Past Dealings – If you've borrowed with this firm before and made repayments on time, then you will be a favourable candidate.

How to improve your credit rating

Most importantly, use credit.

It may sound odd, but not having any form of debt is actually bad for your credit rating. Lenders need to see that you can manage debt reliably and, as the old saying goes, the proof is in the pudding.

Credit firms' idea of managing debt and the general public's may differ. For the lender the more money you owe, to an extent, the better, as it suggests they stand to make more money from you.

However, this only applies if you are keeping up with repayments. Defaulting is one of the most detrimental things for a credit rating and it may cost you dearly in charges.

Finally, stay on the electoral role and avoid changing addresses too frequently. By remaining in one place borrowers are reassured that you will not disappear, taking their money with you.

Advice to those embarking on their credit career

Everyone begins life with a clean credit slate. However, university can give some people a rocky introduction to managing debt, which will remain on their record for years after.

Alistair Lomax, executive director of registered charity which aims to help students cope with the financial barriers UNIAID, has some advice for those entering the world of borrowing.

He says: "[Students] just need to be really careful at the moment not to get a bad credit rating, because it will affect their ability to borrow later on in life.

"The fun you have now could come back to haunt you!"