People with a history of failing to pay their bills and debts on time may end up paying thousands of dollars more for a personal loan, research has revealed.

A person borrowing $10k over three years could pay $2k more in interest if they have a poor credit rating compared to someone with a good rating, according to Canstar.

The research firm found someone with a poor credit rating could be charged 21.29 per cent interest per annum, costing them $3616 in interest compared to $1386 in interest at a rate of 8.63 per cent for someone with a good credit history.

Credit ratings are based on how reliable you are at paying bills, mortgages, rents and other expenses.

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Individuals have a score ranging from zero to 1000 with anything over 700 considered to be a good credit score.

You can find out your credit score for free at www.creditsimple.co.nz

Jose George, general manager of Canstar New Zealand, said a low credit score could see a borrower thousands of dollars out of pocket when it came to personal lending.

"Personal loans come in all shapes and sizes," he said.

"From the more traditional bank loans and store credit deals to the newer peer-to-peer lending options that are now available in New Zealand, the rates on offer can vary greatly but lenders are more willing to give the more favourable rates to someone who looks financially responsible and can be trusted to pay their loan back."

But George said the good news was that a credit score was not fixed and people could improve it.

"Paying bills, rent, mortgage or other payments on time will gain you points where as late or defaulted payments will have the reverse effect."

George also urged credit card holders not to max out their limit and to try to avoid using more than 30 per cent of their credit limit.

"Don't hop from card to card via balance transfers as this will look like you are avoiding paying off your debt."

George said those thinking about applying for a loan should do their research online before taking the plunge.

"If you apply for too many loans around the same time, this may have a negative impact on your credit score as it insinuates you are not managing your finances very well."