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Bottom Line Up Front

  • From missing payments to taking out cash advances, it’s easy to make mistakes when you’re first starting out with a credit card.
  • Using your credit card the right way is key to staying out of debt and protecting your credit score.

Time to Read

4 minutes

May 2, 2022

When you’re out on your own, it’s you making the calls. Do you want to cook tonight or order a pizza? Should you hit the gym or take a night off to hang out with friends? But keep in mind, the bad choices will catch up with you. The same holds true for your credit decisions. And those bad choices can stick with you for years to come, particularly as a first-time credit user when you are trying to build credit. Poor credit use and failed payment history on credit card accounts could make it hard to land a good job or even qualify for your first home. Here’s what you need to know about credit to get you started on the right foot. Avoid making these common credit mistakes now so you won’t kick yourself later.

Use Credit Responsibly and Choose the Right Card

As a young adult with little or no credit history, you'll want to look for a credit card that fits you best. Always examine the costs of any credit offers you receive, including annual fees and Annual Percentage Rates (APR). Consider using a prepaid card to track your expenses while waiting for the right time to open your first credit account. This practice of “using plastic” can help prevent future credit card mistakes.

Only Put on the Card What You Can Pay Off Each Month

Getting behind on credit card bills makes catching up difficult as interest fees stack up. A good rule of thumb: Only use your card for expenses that you know you can pay off when bills are due. Missed payments, late payments and failure to make more than minimum payments can be incredibly expensive, and they may directly affect your personal finances and credit history.

Create a Solid Credit History

While it’s important not to get in over your head with credit card debt, you also want to create a positive credit history for your future. If you avoid cards altogether, you might not have any credit history when you need to make important purchases like a home or a car. A good credit history can have a ton of perks and benefits—lower rates on loans, better car insurance rates and rewards like travel or cash back. Just remember to keep your credit use in check to avoid credit card mistakes, which can affect your ability to obtain new credit. 

Maintain Excellent Credit with Free Credit Reports

In the United States, you can obtain your credit report and credit score from three credit bureaus: Experian, Equifax and TransUnion. is also a great source for your free credit report and is authorized by Federal Law.

  • Experian allows you to check your credit report and your FICO score, and best of all, it’s free. It also offers 24/7 credit monitoring, Experian CreditLock (which controls who can access your credit file) and identity theft protection. 
  • Equifax offers personal credit report assistance by providing your credit score. It also monitors your credit and offers identity theft protection products.
  • TransUnion shows your credit score through a detailed report, offering tools to plan your credit use and  identity theft insurance.
  • Knowing your credit score is key to understanding your credit. Through Navy Federal Credit Union's Mission: Credit Confidence® Dashboard, you can monitor your score over time. You can also use the score simulator to see how certain actions could affect your score.

A Tale of Two Students

  • Carissa got a credit card without an annual fee and with a low interest rate when she got a part-time job. She uses her card sensibly for everyday expenses and makes her monthly payments on time.
  • Spencer started using his credit card as soon as he started receiving job offers. He made just the minimum monthly payments and planned to pay off his credit card when he landed a high-paying job.

A year after college

  • Carissa continues to use her credit card wisely and has been able to increase her available credit, improving her credit score as a result. She has no interest in getting close to her available credit limit as she hopes to maintain her credit for the purchase of her dream house.
  • Spencer maxed out his credit cards within a year and was unable to make the minimum monthly payment, often making payments late. Several companies passed on his job applications when they looked at his credit, thinking he may be a risky candidate. 

Ten years down the road

  • Carissa qualified for a great interest rate on her mortgage. She still puts big purchases on her credit card to earn perks and rewards, but she pays off the credit card balance right away or before the monthly payment is due. 
  • Spencer is working but isn’t making the money he expected. He's slowly chipping away at the debt he accumulated early in his career.


Next Steps Next Steps

  1. Want a credit card that best suits your lifestyle? Check out our variety of credit cards available for Navy Federal Credit Union members.
  2. If you find yourself scuffling to make your credit card payments on time and in full, consider getting some personal finance counseling for support. We'll help you with a plan to get back on track.


This content is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.