Credit is one of the hardest things for many young (and older) people to deal with. Unfortunately subjects like using credit wisely and applying for loans are not offered in schools; these lessons are generally learned in the school of hard knocks. Learning by making mistakes may be effective, but it can be damaging to your credit score and your finances as well.

A better approach is to learn from the mistakes of others and avoid making them yourself. Fortunately, there is a wealth of information available on what to do - and not do - when it comes to credit and credit cards.

One of the biggest, and most commonly seen, mistakes made by new credit card holders is to use that easy money as an excuse to buy lots of unnecessary luxury items. Just because you can charge that four star dinner or five star hotel room does not mean you should. Buying a leather sofa that you cannot afford is a poor use of that new credit card, and it will catch up with you in the end.

The rule of thumb with credit cards is this: if you cannot afford to pay cash for it do not buy it. Of course there are exceptions to this rule, but they should be few and far between. A prime example of an exception to the rule is car repairs. If you need to have your car repaired in order to get to work and keep earning money, that would be a wise use of credit, even if you cannot afford to pay the bill in full at the end of the month. Even in such an emergency, however, it is important to squeeze as much extra money as possible from each and every paycheck until the bill is paid in full.

Other than emergency situations, credit card holders should strive to pay their bills in full every month. If you find yourself unable to do this consistently, it may be time to look at your spending and search for ways to cut back.