Everyone has a credit history whether or not you have taken out any form of credit, such as credit cards, hire purchases, catalogues etc. Your credit rating or score will depend on how you have conducted yourself financially, although it is worth noting that an 18 year old (in the UK) who has never had any form of credit agreement will appear to have a poor credit score simply because they have no credit history to refer to.
In general however a poor or bad credit rating is a result of mishandling your finances, missing payments to creditors, going over your overdraft limit with your bank (if you have one) and so on.
It is important to remember that any agreement you take out, whether it be car insurance or mobile phone contract your payment history to that supplier will form part of the basis for your credit score and any negative (and positive) outcomes will be recorded on your credit file and will remain there for up to six years.
Lenders of any type will do a credit search on you prior to offering you a service, a bad credit score will usually result in lenders refusing to offer you their service or offering it at a higher premium as you will be considered a high risk.
Another point to be aware of (and one that will affect your credit score) is the number of inquiries you have made regarding types of credit. It does not matter if you have taken to credit just that you have inquired. The more inquiries over a short period of time will look like you are or were suffering from financially difficulties and this a lender maybe less inclined to offer assistance to you.
Any court action or debt collection agency activity will also be recorded on your file and will heavily impact your score.
In a nutshell the score is simply a number determined by an array of factors such as; outstanding current credit, past payment history, how long you have had the credit, types of credit and as mentioned above the number of inquiries for credit you have made.
The higher your score the more likely you are to be offered credit and with it usually a better borrowing rate as well.
You can obtain a copy of your credit file by contacting one of the main credit reference companies such as Experian or Equifax, this will give you an indication as to what you are currently doing and what maybe causing an adverse effect on your score.
The easiest way to improve your score is to simply ensure you pay all your bills on time and avoid taking out any more credit for at least one year. This will give you time to build a more positive credit history and show that even though you may have suffered some problems in the past you are now back on track and have everything up to date.