A SURVEY by Firstplus Financial has revealed that 42 per cent of people in the South East could not correctly describe a credit rating. The following is an explanation of terms, courtesy of the personal lending company.

* Credit rating. A score worked out by a lender when you apply for any kind of credit, which gives them an indication of how likely you are to repay your loan.

* Credit scoring. The lender usually undertakes a search about your credit history via one of two main UK credit reference agencies, Experian and Equifax. This, and other information about you, is used in the credit scoring process to create a credit rating to your application.

* Scoring points. Companies providing credit have different criteria to decide whether you are the type of person to whom they want to lend. A number of things are likely to work in your favour, typically those that demonstrate you have a stable lifestyle, at your current address and with your bank. The older you are the more positive the effect will be, especially if you have a good track record in using credit.

* Losing points. Defaulting on loans or mobile phone payments, late payments on utility bills and having too much credit cards will all work against you. According to Firstplus, 41 per cent of people in the South East have at least two credit or store cards left unused for more than 12 months. Closing down accounts like these will help.

* Managing your money. Accidentally missing outstanding payments on credit card and store cards can damage your rating. By paying off high interest credit commitments with a lower rate with Firstplus, for example, youÕll not only reduce your chances of missing important payments, but also improve your credit rating and reduce your monthly outgoings by up to 50 per cent.