Most Common Mistakes to Avoid if You Are New to Credit


The topic of financial health is intimidating for many, but there is no shame in asking for help regarding something you are unsure of. Credit, in particular, can be especially difficult to navigate. This can lead to costly errors that adversely affect your score and financial future altogether.

Once you know what to avoid, you will get the hang of things in no time. We’ve compiled some of the most common mistakes to avoid if you are new to credit, in order for you to learn from them. 

Not Paying In Full

There is comfort in knowing that credit card companies only put a low penalty on just paying the minimum amount required. However, I wish I would have known that doing this would put me in greater debt. My advice is pay your credit card in full every month or if that is not possible, settle more than the minimum amount so the bank won’t charge that much. Happiness comes from being debt-free.

Alex Perkins, Co-founder of All the Stuff

Not Analyzing Your Credit Report Often

Another common mistake people make with credit is not analyzing their credit report often. I always recommend that people check their credit report at minimum once a year to ensure that no errors exist. People should only obtain a free copy of their report at and avoid the free gimmick websites offering to monitor the report.

Someone new to obtaining credit should educate themselves on what triggers credit scores to adjust high and low and be in the know about the different types of debt and how they affect their report. Credit education is key to having a successful credit score.

Jason Gelios, Top Producing REALTOR® | Expert Media Contributor | Author at Community Choice Realty, It’s All About the Real Estate

Making Late Payments

Your payment history is the biggest contributor to your FICO credit score so you need to take this seriously. If lenders see that you miss payments they will think that you are irresponsible with credit accounts and this will hurt your approval odds for the next line of credit you apply for. You

should set up automatic payments for the minimum balance due each month and set a recurring calendar reminder a few days before the due date to see if you can pay off the full balance or most of it.

Rebecca Hunter, CEO of The Loaded Pig

Paying Off Loans With Your Credit Card

One of the biggest mistakes while using a credit card that will put your credit score at risk is when you use your card to pay off your student or house loan. When you take a loan to pay off a loan it’s just bad finance. Not only are the interest rates very high, defaulting on the card will cause harm to your credit score. Another credit mistake is while reporting it. Incorrectly written information can be another avoidable mistake.

Maria Snider, Digital Creator at RankSoldier International Private Limited

Closing Accounts

A typical credit mistake that people often make is closing accounts. An essential factor in your credit score is the age of your accounts. The older, the better.

After paying off your credit card debt, it can be enticing to close the account so that you’re tempted not to use it again. However, this can affect your credit score if it’s an account you’ve had a long time.

The age of your accounts is important, as well as your debt-to-credit ratio. If you close those accounts, you’re also minimizing your available credit. It’s better to keep them open and have zero debt with lots of available credit to boost your score.

Tana Williams, Personal Finance Blogger at Debt Free Forties

Not Staying in Touch With Lenders

Make arrangements with your lender for any collection items, judgements, charge-offs, or anything else owed that you can’t pay off in a timely manner. When you avoid the negative issues and don’t contact your lender, your options decrease. Always stay in touch with your financial institution or lender; communication is key to receiving solution-oriented help. Never agree to arrangements that you will not be able to keep.

Carma Peters, CEO of Michigan Legacy Credit Union

Treating All Credit Equally

Know that all credit isn’t treated the same. Credit cards and student loans can impact your score differently and it’s good to have a mix of different credit types. Opening one credit card and taking out a small personal loan, for example, can help you build credit if you’re repaying them on time and keeping your credit card balances low.

Rebecca Lake, Personal Finance Expert and Owner of Boss Single Mama

In Conclusion

Being new to credit is confusing, to say the least. Especially if you know nothing about where to find the best credit unions, the list above should be enough to get you started, but if there is anything else you need to know, you shouldn’t be afraid to ask for help. As Carma Peters said, communication with your lenders and financial institutions is key. Let them assist you, and you will see how far this advice will take you.


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