From buying a car to paying for college, having good credit is essential for so many of the financial endeavors that go on throughout life. Credit refers to your reputation as a borrower, and it signifies to borrowers how likely you are to repay your loans.  A long and positive credit history helps you to secure loans with low interest rates and may even help you land a job or rent an apartment.

Unfortunately, you can’t build good credit without using credit. It’s a process that takes time, and if you’re trying to build it quickly, you might make some harmful mistakes along the way. The following are four mistakes to avoid when you’re beginning your credit journey.

Signing up for multiple new credit cards

One of the biggest mistakes that many first-time credit card users make is signing up for a bunch of cards at once in hopes of boosting their credit quickly. This is a risky practice as the more credit cards you open up, the harder it will be to keep up with their monthly payments. If you open up five new credit cards, and you put purchases on each of those cards, you’ll have five more monthly payments to juggle. In addition, each time you apply for a credit card an inquiry is added to your credit report which can drop your overall score.

Signing up for the wrong credit card

While having a credit card is a great way to start building credit, some cards do more harm than good. From sneaky fees to high-interest rates, signing up for the first credit card you find may end up hurting your credit. Make sure to do your research beforehand and find a card that suits your own financial needs. Some credit cards tempt members with money-back bonuses so always do your research before to ensure that it offers the terms you want before you apply. Common Trust FCU offers Mastercard credit cards with low-interest rates and no fees, making a perfect option for someone just starting out.

Spending more than you can afford

If you’re trying to build credit, one habit to steer clear of is borrowing more than you can afford. While you might be excited about opening up your first credit card, avoid the temptation of overspending on your new card. Try not to use more than 30% of your available credit in order to keep your credit utilization score low. Credit utilization, or how much of your available credit you have used, can negatively impact your credit score when it’s over 30%. Be cautious about overspending on your cards as it can end up harming your credit rather than helping it.

Making late payments

Did you know that your payment history typically makes up over one-third of your credit score? Your payment history is primarily comprised of whether you missed a payment and how severe and frequent the missed payments were. Because of this, consistently making late payments or missing payments altogether can stay on your credit report for up to seven years. Even if you can only pay your minimum balance, make on-time payments to positively build your credit. In addition, getting into the habit early on in life of making timely payments will benefit you in the long run.

Building good credit is essential, but you also want to make sure that you do it the right way. If you currently don’t have any credit, taking out a credit builder loan from CTFCU is a great way to get started. Running until May 31st, this low-interest loan is the perfect solution for growing your credit history easily and safely. Visit our credit builder loan promotion page to learn more or stop by the branch to get started!