Posted by: John S Kiernan

In order to build a good credit score, you must first establish credit. Establishing credit means beginning your credit history by obtaining a loan or line of credit. That’s all you need to get your first credit report and score. And it’s the first step toward one day qualifying for a decent mortgage, car loan, etc.

So if you’ve had a loan or credit card — or your name has been associated with one — for at least a month, your credit should already be established. You can see for yourself by checking your latest credit score and report for free on WalletHub.

Below, we’ll tell you exactly what you need to do to establish credit.

1. See if You Have a Credit Report

The mere presence of a credit report in your name means you’ve already established credit. Perhaps you are or were previously an authorized user on a family member’s credit card account, for example. However, it could also mean that you have been a victim of identity theft or have a collections account in your name.

Get Your Credit Report – 100% Free

You can learn the specifics of your situation by signing up with WalletHub. Should you find a report tied to your Social Security number, carefully review its contents and dispute any errors or fraudulent accounts that you come across. You can also ask the credit bureau to remove negative records from a card on which you were an authorized user. As an authorized user, you are not responsible for any misuse of the account.

2. Open a Starter Credit Card

Credit cards are the best credit-building tools at our disposal. They are generally easy to get, and they all report information to the major credit bureaus on a monthly basis. As long as this information reflects responsible use (especially when it comes to on-time payments), you will not only establish credit but also begin to build a very solid track record.

Your top priority at this point should be to find a card that you can get approved for and does not charge an annual fee. This will help you establish credit faster, avoid unnecessary hard inquiries and save as much money as possible.

When choosing a starter credit card, you have three main options:

Type of Starter Credit Cards	Details
Secured Credit Cards	Offer nearly guaranteed approval and make it impossible to spend more than you can afford to repay
Student Credit Cards	Tend to offer the best terms but require you to have an active college or university email address
Credit Cards for People with Limited Credit	Are somewhere between secured and student cards, offering decent terms and moderate approval odds to the general public

Some people may be reluctant to open a credit card. And while it is possible to build credit without a credit card, loans are the primary alternative.

Any loan will require you to go into debt and lose money on interest charges. Many credit cards, on the other hand, can be locked away in a drawer unused while still helping you build credit.

3. Use Your Card Responsibly for 6+ Months

You can establish credit and get a credit score within a month of getting your first loan or line of credit. But that score will be based on such limited information that it could easily take a nosedive if you make a mistake early on.

So it’s very important that you make on-time payments and maintain reasonable credit utilization for the first six months or so. As a general rule, you should try to use less than 30% of your spending limit (or less than 10% for the best results). Careful budgeting and setting up automatic monthly payments from a bank account can be quite helpful in meeting these goals.

It’s also worth noting that responsible use of your first credit card can pay off in the form of a higher credit limit down the road. That, too, can help your credit score go up.

4. Check Your Credit Report & Score Often

Checking your credit at this point will tell you whether you’ve successfully established credit or have more work to do. Once your credit report and score become available, you’ll be able to gain a sense of how your initial performance was graded.

Your credit score is one obvious indicator. But credit scores are made up of several parts, and you can gather additional intelligence by reviewing ratings for each component of your score on WalletHub. We’ll tell you exactly what’s holding back your score and how to fix it. That’s important because it will allow you to change course before any problems take too big of a toll.

Get Your Free Credit Analysis 5. Build & Improve Your Credit

Congratulations! You’ve established your credit. Now it’s time to continue working toward lasting excellence and the savings that come with it. So if you’re ready to take things to the next level, check out our guides on how to build credit and how long it will take. After all, what you really want to do is establish good or excellent credit, and you need to build up to that if you want it to last.

If you are planning to apply for a new loan, line of credit, apartment or job that requires a credit check in the near future, you may also want to explore the various ways that you can improve your credit in the short term. Finally, if you want to learn what not to do, our articles on credit mistakes to avoid and the reasons credit scores can fall should prove enlightening.

Ask the Experts: Getting Established

It's important to make a good first impression. So to help you start your credit career on the right foot, we posed the following questions to a panel of personal finance experts. See who they are and check out their advice, below.

• Is responsible credit card use the best way to establish credit?
• Is it too hard to get credit without prior borrowing experience? Too easy? Just right?
• What is the best piece of advice you have for someone who wants to establish credit from scratch?
• What is the biggest mistake that people make when first establishing credit history?

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• Ananth Seetharaman Department Chairman and Professor of Accounting at the University of North Texas College of Business
• Abed Rabbani Assistant Professor in the Department of Personal Financial Planning at the University of Missouri
• Elise Huston Certified Financial Planner and Wealth Manager at Flourish Wealth Management
• Cheryl Clark Associate Professor of Accounting at Point Park University
• Hossein Nouri Professor of Accounting & Information Systems in the School of Business at The College of New Jersey
• Mingzhu Tai Assistant Professor of Finance in the Faculty of Business and Economics at The University of Hong Kong
• Denise Smith Associate Professor and Accounting Program Director in the School of Business and Mass Communications at Brenau University
• William Griffin Professor of Business at the Triton College
• Suzanne Lynch Professor of Practice in Economic Crimes at Utica College
• Michael Johnson Finance Instructor at Madison College
• Don-Weimer Instructor of Economics at Milwaukee Area Technical College
• Marty Frost Professor and Chair of the Human Development and Family Relations Department and Interim Chair of the Social Work Department at the State University of New York Plattsburgh
• Scott M. Brenner Visiting Professor, Accounting Department, Fairfield University, Dolan School of Business, Partner, Marks Paneth, LLP

Ananth Seetharaman Department Chairman and Professor of Accounting at the University of North Texas College of Business Is responsible credit card use the best way to establish credit? “Responsible” is the key word. Depending on your circumstances, not having a credit record is better than having a bad one. Is it too hard to get credit without prior borrowing experience? Too easy? Just right? It is somewhat of a catch-22 situation, isn’t it? Cannot get credit without a good credit record, but cannot get a good credit record without credit. This catch-22 is one of many reasons you need to be reliable as a young adult, and have good relations with your parents. If you do that, you’ll find it easier to get your Dad or Mom to co-sign that first credit card or loan. Pay it off responsibly, and you’re on your way to establishing good credit. What is the best piece of advice you have for someone who wants to establish credit from scratch? Get a credit card from a bank in which you have a checking account, and then use your credit card like a delayed debit card. At the end of each day, pay off your charges by transferring money from your checking account. What is the biggest mistake that people make when first establishing credit history? Failing to understand that the instant gratification and the pain are not synchronized. It’s so easy to charge and get instant gratification -- the pain comes later, when you realize that you cannot pay off the full balance. Abed Rabbani Assistant Professor in the Department of Personal Financial Planning at the University of Missouri Is responsible credit card using the best way to establish credit? To determine whether you are creditworthy or not, the creditors look at your 5 Cs: Character, Capacity, Capital, Collateral, and Conditions. Responsible credit card use is just one aspect of establishing your credit. If you are behind on your light bills, the utility company may report it to the credit bureaus, thus it may reflect poorly on your creditworthiness. If you have an old medical bill that you are not aware of, and it went to a collection agency, it will be reflected on your credit report. If you have co-signed for your child’s student loan that is in default, your credit history will reflect that. Therefore, establishing credit requires responsible financial behavior, responsible credit card use is just one aspect of it. Is it too hard to get credit without prior borrowing experience? Too easy? Just right? It depends on how financially responsible you are. Responsible financial behavior is more important than prior borrowing experience. Getting credit will be hard for you even if you have extensive borrowing experience, but your payment history is marred with late payments, defaults, and collections. If you have excellent payment history, you may still qualify for credit, even with little borrowing experience. What is the best piece of advice you have for someone who wants to establish credit from scratch? Please check if you already have a credit report. You may have a credit report without even having a credit card. Your report may not show much activity, but you may have one. If you have one, get your credit report to inspect where you are currently standing. The most damaging information on your credit report is sometimes found from public records, such as arrests, convictions, judgments, foreclosures, garnishment, tax liens, bankruptcies etc. Often there is incorrect information on the credit report, that will hurt you when you are establishing your credit. So, first thing, get your free credit report from https://ift.tt/o2j1vQ and inspect it, to see if there is/are any issues. What is the biggest mistake that people make when first establishing credit history? The biggest mistake people make is that they do not look at their credit report regularly. Creditors look at their credit report to decide if they are going to lend you money, the amount of credit and at what interest rate. A credit report is not only a history of how you are using your credit card, which many consumers erroneously believe it is, it is also a history of your financial behavior. If you defaulted on a utility bill, it may show up on your credit report, and thus affect your credit history. Elise Huston Certified Financial Planner and Wealth Manager at Flourish Wealth Management Is responsible credit card use the best way to establish credit? Responsible credit card use can be a great way to start building credit. However, you want to be sure to make these payments in full each month and on-time, to establish good credit history. A way to ensure this happens is to set your credit card up for auto-pay, to ensure you do not miss a payment. It is also important to keep your credit utilization low. In general, this means only using about 30% of the credit available to you each month. Is it too hard to get credit without prior borrowing experience? Too easy? Just right? It can seem difficult to get credit history without prior borrowing experience, but there are ways to develop credit at an early age.

• You can take out a starter credit card, student credit card or a department store credit card. This is a great way to start to develop credit history by making on-time payments.

• In addition to building a strong record of paying credit cards on time, you can demonstrate the ability to handle debt by co-signing for a car loan with your parents before heading to college, or early in your twenties. Typically, people do not think about establishing credit until they need it.

What is the best piece of advice you have for someone who wants to establish credit from scratch? The best piece of advice I have for someone who wants to establish credit from scratch is to make your debt or credit card payments on time, and make the payments in full. I recommend requesting your credit report summaries from the three credit reporting agencies (TransUnion, Experian & Equifax) every year. You can request these reports for free each year and it will not affect your credit score. This will give you the opportunity to review your credit history and check for accuracy or potential fraud. We are seeing credit scores more available for free on diffeent sites, and from your credit card provider. This encourages consumers to be mindful of their credit score. On average, it can take one to two years to build a good credit score, so it is important to start building credit at a young age. What is the biggest mistake that people make when first establishing credit history? One of the biggest mistakes people make when first establishing credit history is failing to make a payment on-time. One late payment will have a greater impact on your credit score early on, compared to a late payment after ten years of great credit history. It is also important to pay off the full balance each month. Each time you make the minimum payment only, you are accruing interest on the remaining balance. Typically, credit cards have the highest interest rates compared to other types of debt. A good practice is to determine what you need to purchase each month, and ensure these are items you can pay for, in full, when your credit card payment comes due. It is easy to use a credit card to pay for things we want, but people can run into trouble if they do not have the funds to pay the credit card balance in full. Although the formula is not expressly known, it is important to consider the different factors that go into calculating your credit score. These can include payment history (on-time payments and payments made in full), credit utilization (percentage of available credit that has been borrowed), length of credit history (length of time each account has been open), new credit (amount of recently opened accounts) and credit mix (different types of debt). It is important not to close your oldest credit card account, or open a lot of credit cards at the same time, as these factors will all impact your credit score. Cheryl Clark Associate Professor of Accounting at Point Park University Is responsible credit card use the best way to establish credit? If you are referring to establishing a good credit score, such as a FICO score, using credit cards responsibly is one way to impact that score positively. Most people just starting out do have other forms of debt, such as student loans, that are part of the credit history. Other things to consider are making sure you have a good debt-to-equity ratio, making sure you don't have too much debt concentrated in credit cards, and making sure you pay all of your other non-credit card obligations, such as utility bills and rent or mortgage payments on time. Is it too hard to get credit without prior borrowing experience? Too easy? Just right? Lenders look at the credit history of an individual before agreeing to provide credit to that person, but they also look at other types of data, such as employment history, and education and asset portfolios, such as savings accounts and real property. All these bits of data combined help the lender predict whether or not the individual is a good credit risk. If the individual does not have prior borrowing experience, then that is a piece of missing data, and therefore the lender will consider this borrower a bit more risky, although if all the other pieces of data are strong, then this missing credit history can be offset. What is the best piece of advice you have for someone who wants to establish credit from scratch? Make sure you pay your bills on time. Debt takes away your freedom, and a low credit score costs you lots in the form of higher interest rates in the long run. If you have a credit card, make sure you use it responsibly. Responsibly means try to only use it for necessities, not to finance fun. Credit cards, as a general rule, are not the best way to finance large expenditures either, but they do provide rewards. Use them, but try to pay them in full each month. What is the biggest mistake that people make when first establishing credit history? I think it is indiscriminately using credit cards for general purchases, and not paying the balance off each month. Most of the time, these individuals end up carrying a large balance and paying interest on it, effectively making anything they buy much more expensive. Take the person who goes Macy's to buy a shirt, because it is on sale for 15% off. They pay for it with a credit card that carries a 24% interest rate, and the individual only makes minimum payments on the card. Hossein Nouri Professor of Accounting & Information Systems in the School of Business at The College of New Jersey Is responsible credit card use the best way to establish credit? Yes, it is. Is it too hard to get credit without prior borrowing experience? Too easy? Just right? Yes. It is very difficult. What is the best piece of advice you have for someone who wants to establish credit from scratch? Add the person to their parents’ credit card. What is the biggest mistake that people make when first establishing credit history? Not paying the minimum, or not paying the whole balance by the due dates. Mingzhu Tai Assistant Professor of Finance in the Faculty of Business and Economics at The University of Hong Kong Is responsible credit card use the best way to establish credit? It is still a black box how credit bureaus assess your credit. Using credit cards responsibly is definitely one of the most important ways to build credit, especially when people haven't had much borrowing experience. Meanwhile, people should also pay attention to other things. Nowadays many activities could be linked to people's credit records, such as payment for utility and medical bills, taxes, etc. Any misbehavior with regard to these activities could potentially hurt your credit. Is it too hard to get credit without prior borrowing experience? Too easy? Just right? Borrowing experience is still the most important thing so far that gives people credit, and getting credit without such experience is still hard. Hopefully, things are improving in recent years, as more and more financial institutions and fintech firms are assessing borrowers based on a more comprehensive set of information. What is the best piece of advice you have for someone who wants to establish credit from scratch? Do it step by step, and start with a credit card limit that you can handle. What is the biggest mistake that people make when first establishing credit history? It is hard to tell the biggest mistake, but one mistake people always find is that they tend to spend too much once they start using a credit card, which would generate high costs and even hurt their credit later if they could not afford to repay. Denise Smith Associate Professor and Accounting Program Director in the School of Business and Mass Communications at Brenau University Is responsible credit card use the best way to establish credit? I don't know that I would call it the “best” way, but it is certainly a good way to establish credit. A good strategy would be to use more than one activity, such as paying utility bills promptly, making car payments timely, and keeping student loan payments current. Is it too hard to get credit without prior borrowing experience? Too easy? Just right? In the past, I believe it was too easy. I've had students receive unsolicited credit cards in the mail, and all they had to do to activate it was use it. My suspicion is that many of these became bad debts and adversely affected the student's credit. This seems to have improved, and may even be a bit too rigorous now in some cases. Requiring co-signers has reduced some young people's ability to get credit in the first place, and having that co-signer can give young people a sense of less accountability, since someone else is there to bail them out. What is the best piece of advice you have for someone who wants to establish credit from scratch? Again, a good strategy would be to use more than one activity, such as paying utility bills promptly, and keeping student loan payments current, and don't apply for more than one credit card. What is the biggest mistake that people make when first establishing credit history? The biggest mistake I've seen is trying too hard. For example, applying for several credit cards in a short span of time, or trying to buy a car from several dealers by completing the application, and having several inquiries hitting their credit record. This makes the person seem desperate and irresponsible as well. William Griffin Professor of Business at the Triton College Is responsible credit card use the best way to establish credit? Establishing credit is imperative for everyone, but more importantly, managing credit is essential. As we teach students in personal finance, understanding and managing your budget is the key to establishing a very good credit score. Is it too hard to get credit without prior borrowing experience? Too easy? Just right? Yes, it is difficult to receive credit without a good credit history. Start off by applying for no more than two credit cards with borrowing limits set very low. Use and manage your credit very carefully. What is the best piece of advice you have for someone who wants to establish credit from scratch? Start out applying for a credit card from Master Card, Visa, or Bank, and a $2000.00 limit. Pay the amount used off each month, and never be late making your payment. Credit Unions are an excellent source for establishing credit. What is the biggest mistake that people make when first establishing credit history? Over extending the amount used and being late with the monthly payment. As I teach my students, the greatest disadvantage is the temptation to overspend. Compare interest rates that creditors will charge you, and understand how being late can affect not only your payments, but your credit score. Suzanne Lynch Professor of Practice in Economic Crimes at Utica College

Is responsible credit card use the best way to establish credit?

Yes, of course. Banks monitor spending and how you pay monthly. The best method is to pay your bill in full every month. If you cannot -- make sure you pay more than the minimum payment required.

Is it too hard to get credit without prior borrowing experience? Too easy? Just right?

It depends on the bank that issues the MasterCard or Visa. Some banks have higher interest rates for first-time credit card applicants without a credit history. There are also banks who issue "secured" card accounts, where you have to put money in an account "up front," and then they issue the card with that credit line amount. An example would be sending the bank $500 to "secure" the card, and they would issue the card with a $500 credit limit. They also charge higher interest rates and additional/higher fees (late payment, cash advance on your credit card), so make sure you understand all the terms and conditions, interest rate and fees. See answer below.

What is the best piece of advice you have for someone who wants to establish credit from scratch?

Open a "private label" card, as it is known in the card world -- a major retailer will issue credit for purchases only at their stores -- Macy's, Kohls, Best Buy, etc. The requirements for issuance are not as strict and you can develop a credit history. Many times, stores will issue you a credit card at the point of purchase. Of course, pay your bill in full every month. That will establish your history.

What is the biggest mistake that people make when first establishing credit history?

Spending too much once they get the card, then trying to make the payments. Sounds so simple, but paying the bill is when reality hits "first-timers."

Michael Johnson Finance Instructor at Madison College

Is responsible credit card use the best way to establish credit?

Responsible credit card use is the best way to establish credit. Using credit cards properly by paying off the balance every month results in an interest-free loan. All other loan products will carry high interest rates for individuals who have no established credit or low credit scores. Disciplined spending is a critical element of personal finance, so if a person is concerned about overspending due to the ease of using credit cards, then a useful strategy might be to use credit cards only for necessities and pay off the balance every month. This will limit the urge to make impulse purchases and will help keep spending within the individual’s budgetary guidelines. After several months of responsible credit card use, a person’s credit score will increase dramatically, and the interest rates available to the potential borrower on other types of loans will be much lower than those offered prior to opening the initial credit card account.

Is it too hard to get credit without prior borrowing experience? Too easy? Just right?

Prior to the “Great Recession” a decade ago, it was very easy to get credit without prior borrowing experience. Shortly after the recession, it became difficult to get credit for new potential borrowers. New legislation was passed, including the Card Act of 2009, which restricted anyone under the age of twenty-one from getting a credit card without an established ability to make payments. The current environment for getting credit is neither too difficult, nor too easy. Recent improvements in credit scoring models have aimed to utilize more trend data and machine learning, which should lead to more accurate predictive behavior of the models, and ultimately, better credit decisions.

What is the best piece of advice you have for someone who wants to establish credit from scratch?

The best advice I could give to a person with no credit history is to ask a parent or other relative to add him/her as an authorized user of an existing credit card account. The easiest way to establish credit from scratch is to be added as an authorized user to an established credit card account. I have added each of my four college-age children to one of my credit card accounts, and they have greatly benefitted in the form of high credit scores, even though none of them has ever taken out an actual loan. Adding a person as an authorized user incorporates all of the history of that specific credit card account, and can immediately establish a relatively long and healthy credit history. There is no need to actually give a credit card to the authorized user if a parent (or other responsible adult) is concerned about the authorized user possibly abusing the privilege of having a credit card.

If being named as an authorized user on an account is not an option, then I would recommend a secured credit card from a local credit union or a major credit card issuer. This process generally involves depositing funds into a certificate of deposit, which is used as collateral for a credit card issued by the institution. Discover, Capital One and Citibank all offer secured credit cards with no annual fee. After a period of responsible credit card use, the deposit requirements will be waived and the secured credit card account will become an unsecured credit card account.

What is the biggest mistake that people make when first establishing credit history?

The biggest mistake people make when first establishing credit history is not educating themselves and then comparison shopping for the best product and interest rate to meet their needs. Interest rates, fees and other loan terms vary greatly across institutions and loan products. A person should not take the first offer presented, and should always compare loan options from two or more lenders. The largest asset class for banks and other lenders is loans. Essentially, that means they need to make loans to make money, and they need consumers to borrow from them.

Lenders are not doing people favors by lending to them. They are simply adding to their asset base in an effort to make bigger profits for themselves. Nobody is going to look out for the best interests of potential borrowers, except for the borrowers themselves. Therefore, it is imperative for consumers to improve their level of financial education, and make informed choices when selecting financial products and building credit histories.

Don-Weimer Instructor of Economics at Milwaukee Area Technical College

Is responsible credit card use the best way to establish credit?

By “establish credit,” I take that to mean “establish a credit history.” It’s a good start. Other ways are by minimizing student loan debt and paying diligently.

Is it too hard to get credit without prior borrowing experience? Too easy? Just right?

Anyone can get a loan, if only from a payday lender at sub-prime rates. This was not always the case. Before 1978, almost every state had laws limiting the interest rates lenders could charge for loans. That changed with the Supreme Court’s decision in Marquette National Bank of Minneapolis v. First of Omaha Service Corp. (439 U.S. 299, 1978).

That decision eliminated all interest rate caps, so loans became available with the interest rate based on what the market would bear. Before this decision, the U.S. was a nation of savers. We are now a nation of borrowers.

What is the best piece of advice you have for someone who wants to establish credit from scratch?

Live within your means. Keep your skills sharp, so you can earn as much money as possible. Then live on less than that.

Develop an emergency fund, so that you are not trapped in an unhealthy relationship or a job in a toxic workplace. You will have resources so you can leave and get a fresh start.

Then (and not until) follow these steps:

• Get a card from your credit union or bank, with the lowest fees you can get;
• Charge something on it that you know you will regularly pay, such as your cell phone bill;
• Put the card in a bowl of water and put it in the freezer;
• When the monthly credit card bill comes, the only thing on it will be your cell phone bill -- pay it off on time and in full every month.

That way, you’ll build up a credit track record and you’ll have the card for an emergency.

What is the biggest mistake that people make when first establishing credit history?

Overspending.

Marty Frost Professor and Chair of the Human Development and Family Relations Department and Interim Chair of the Social Work Department at the State University of New York Plattsburgh

Is responsible credit card use the best way to establish credit?

While responsible credit card use is an important way to establish credit, I don't think it's necessarily the best way. Responsible consumers, such as college students (just starting to get established in the financial and credit fields) may not have gotten a credit card yet, but may still establish a positive credit rating for themselves.

Is it too hard to get credit without prior borrowing experience? Too easy? Just right?

While it may be challenging to get credit without prior borrowing experience, there are ways one can overcome this challenge. Getting rent, utilities, cable, phone, and other bills in one's name, and paying these bills responsibly (on time and the full amount) is a good start to developing a positive credit history. One might also take out a small loan against one's savings account (using the savings as collateral) and make each installment payment on time and for the full amount that month).

What is the best piece of advice you have for someone who wants to establish credit from scratch?

The best advice I can give to someone who wants to establish credit from scratch is to do the things I mentioned in the previous answer. It may take some time to build a positive credit history, but when one demonstrates punctual, responsible bill paying behavior over a year (or several years), this behavior presents a picture of a responsible consumer. Regarding the use of credit cards, I think it's important to maintain a credit utilization ratio of 25 percent or less.

What is the biggest mistake that people make when first establishing credit history?

The biggest mistake people make when first establishing credit history disregarding the seriousness of making payments late (or missing payments altogether). Another big mistake is maxing out one's credit card(s) every month and making only the minimum payment. Yet another mistake is applying for a credit card with an introductory teaser rate of 0% APR for six months, only to transfer that maxed-out balance when the six months are up.

Scott M. Brenner Visiting Professor, Accounting Department, Fairfield University, Dolan School of Business, Partner, Marks Paneth, LLP

Is responsible credit card use the best way to establish credit?

That is certainly one way to establish credit, but I think you must define responsible credit card use. Responsible credit card use is making sure the user can afford to pay the card off immediately. The other way to establish credit is to make sure you pay your bills on time. If you were to look at the FICO score calculators that is the biggest indicator of someone’s credit risk.

Is it too hard to get credit without prior borrowing experience? Too easy? Just right?

I think it is sometimes too easy to get a credit card. I believe that credit card companies understand that extending credit can be a good “profit maker” by charging high interest rates to those who carry a balance on the card. You should never carry a balance on a credit card.

What is the best piece of advice you have for someone who wants to establish credit from scratch? Get a credit card that will give you perks and use it within your means. Do not spend more just to get the perks. Use it for everyday expenses to build up the perks, but make sure to pay off the card once the balance is due.  As I said before you should never carry a balance. Finally, ALWAYS pay all of your bills on time. This will help build credit history/your credit score.

What is the biggest mistake that people make when first establishing credit history?

One is not paying bills on time or carries a balance on the credit card and telling themselves they will pay it off the next month and then next month comes and something gets in the way. Having too many credit cards can hinder your credit history as well and that is another mistake I see. People will often go into a story and get a discount for opening up a card. Don’t! It’s often not worth it. One or two credit cards are enough.

Image: martinwimmer / iStock.

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