1 You got a credit card and were not prepared to manage it.

There is no requirement to have a credit card. In fact, it can be a good idea to start with a simple debit card. This way, you will never spend money that you do not have. In many cases, a credit and debit card function in the same way but having a debit card will protect you from building debt.

Oftentimes, people use credit cards before they have a steady income. Far too often, young adults get in over their heads by charging their extra expenses to credit cards. Then they fail to pay careful attention to credit statements in the next months. They often do not realize that it builds into massive debt over a relatively short period of time until it is too late.

2 Choosing the wrong credit card

Credit cards are not the same. In fact, there are significant differences between credit card companies and the cards that they offer. Make sure you do research to figure out which one is right for you. You should be able to get some kind of reward, whether miles, points, cash back, etc. All of this should come with no annual fee. If you do end up selecting a credit card with an annual fee, make sure that it is worth it to you and include this annual fee in your budget.

3 Rushing to improve credit score

When you are seeking to build your credit score, one of the keys is patience coupled with a plan. Credit scores consider age of accounts and payment history as about 50% of your credit score. By improving your financial habits over time, both will improve and along with them so will your credit score.

You should be encouraged to know that most creditors review your most recent 24 months of activity more carefully than what preceded it. They see this as the best indicator of risk in most cases. So in most cases when you are seeking to improve your credit be prepared to wait patiently. Credit scores do not improve overnight.

4 High levels of revolving debt

Review your credit report for the type of debt. Revolving debt is the type of credit offered by credit card companies and typically carries the highest interest rates. In general, creditors see red flags if your revolving debt is above 30% of its limit. Between 10-29% is viewed as more manageable.

5 Co-signing without a care

When you co-sign for anything – whether a credit card, mortgage, or lease, you are assuming responsibility. Co-signing for someone should be considered very carefully. Why can’t the person sign themselves? It is worth it to assume this risk for them? In many cases the answer is no. If someone cannot get approved for something – in many cases it is because they cannot afford it.