Effectively using credit cards can save you money and enhance your credit rating over time. By managing your card wisely, you’ll impress lenders and be eligible for top financial products.

The principles of strong credit management also apply to broader aspects of life. Here are eight key rules for smart credit use, and how they can teach you valuable life lessons.

1. Don’t be afraid to start small

To build a credit history, you need to use credit products that will be reported to credit bureaus. Starting with small steps is essential.

“A lot of people are hesitant to build their credit,” says Ross Mac, a financial expert from Chicago and co-star of Netflix’s “Get Smart with Money.” “But you’ve got to get in the game! Credit impacts nearly every aspect of life. Don’t delay.”

There are many starter credit cards available for those without an established credit history. Some are secured credit cards, requiring a cash deposit as collateral, while others are unsecured with modest initial credit limits.

By paying your bills on time and maintaining low balances, you demonstrate to lenders that you’re a reliable borrower. Over time, you might receive your security deposit back, turning the account unsecured, and the issuer may increase your credit limit without a request.

Building trust, whether with credit or in other areas of life, takes time. The sooner you start, the better.

2. Address potential problems early

You might find yourself using your card for purchases you can’t fully afford, leading to potential debt problems. If your spending exceeds your means, your debt can quickly spiral out of control, making it difficult to pay off the full balance when it’s due. Additionally, unless you’re using a 0% APR credit card that waives interest for a certain period, carrying a balance will incur accumulating interest charges, worsening the situation.

To manage this risk, monitor your spending in real-time with your credit issuer’s mobile app and consider pausing charges if you notice your spending getting out of hand.

Preventing issues before they arise is always more effective than dealing with them later. By addressing the problem early, you can more easily adjust your course and get back on track with your credit and other aspects of life.

3. Face your fears and find solutions

Eventually, you might make a mistake you can’t prevent. Perhaps you miss your credit card due date and incur a late fee, skip an entire payment cycle and get a late payment mark on your credit report, or charge so much that you can’t meet the minimum payment on a large balance.

When mistakes happen, focusing on solutions can help you overcome anxiety, says Dr. Fern Kazlow, a clinical psychotherapist based in New York City. “Accepting 100 percent responsibility without devaluing yourself is a huge life lesson,” Kazlow explains. “This is an opportunity for you to continue to grow, and that means facing your fears, financial and otherwise.”

Contact your credit card issuer, explain the situation, and propose a resolution. This is also the time to ask if they can assist you by waiving a fee or offering a hardship plan.

Being able to have difficult conversations with your credit card issuer can prepare you for similar discussions with your spouse, boss, or friend when issues arise.

4. Allow time to heal old wounds

So, you’ve made some mistakes or decisions that hurt your credit. It happens. Maybe an account legitimately went into collections, or you filed for bankruptcy. While you can’t remove accurate negative information from your credit file, you can let it recede into the background.

According to the Fair Credit Reporting Act, most derogatory information will drop off your credit report after seven years. (Chapter 7 bankruptcy will stay for 10 years.) Once it does, it will no longer impact your credit scores, and only you will be aware of it.

Don’t dwell on the past. Take comfort in knowing that even painful mistakes will eventually fade from memory.

5. Focus on the present and move forward

Although building a credit history over many years will help your credit scores rise, how you’ve managed credit products over the past 12 to 24 months is far more relevant to a lender than what you did years ago.

In credit development, recency, frequency, and severity matter. A minor mistake you made a long time ago will have minimal impact, while a series of recent errors will weigh more heavily.

“To use a sports analogy, you’re only as good as your last game,” says Mac. “Recency bias is real, but you can use it to your benefit, too. If you’re paying all your bills on time now, when you didn’t before, that’s great. Keep it up.”

All the positive actions you take now are significant. As they accumulate from this point forward, they become your new normal.

6. Flex your best qualities

The most popular credit scoring model is the FICO Score, which considers five categories of information, each with varying degrees of importance. Collectively, these categories paint a comprehensive picture of your creditworthiness.

Payment history (35 percent): Paying all your bills on time demonstrates responsibility.

Credit utilization (30 percent): Credit cards should be used as payment tools, not as supplementary income. Keeping your balance low compared to your credit limit shows financial independence.

Credit history (15 percent): The longer you use credit products responsibly, the more mature your credit history appears.

Types of credit (10 percent): Utilizing various credit products, from credit cards to loans, indicates versatility.

New credit (10 percent): Applying for credit judiciously signals stability, while numerous applications in a short period suggest desperation.

Together, these factors highlight your responsibility, independence, maturity, versatility, and stability as a credit user and individual.

“What we do with credit and money is a powerful reflection of how we see ourselves,” says Kazlow. “It’s a great mirror, not a paddle that you beat yourself up with.”

7. Don’t settle for less

Credit card accounts function as a two-way street. The issuer allows you to borrow money for your purchases, and as a cardholder, you’re expected to use the card responsibly and repay your loans as agreed. Once you’ve established a good-to-excellent credit score, it’s time to actively seek out the perks that accompany your proven creditworthiness.

Always aim for the best credit cards you qualify for, tailored to your lifestyle. This approach ensures you can benefit from rewards programs and enjoy perks like travel benefits and consumer protections that enhance your life.

Be discerning. Understand the options available, pursue the rewards you’ve worked hard for, and take action to obtain them — they won’t always come to you.

8. You control the outcome

Credit issuers update your credit reports with your latest activity every month, and credit scoring companies then incorporate all the financial data from your report. This means you have control over your credit rating, and your reports and scores can change monthly based on your actions.

This kind of influence over how you’re perceived is powerful. Depending on your actions, every month can tell a different story.

“Credit cards can teach you a lot about yourself,” says Mac. “The lessons are the same. It’s about righting wrongs, keeping perspective, and making a good impression.”

In Conclusion

Using credit cards can teach you important life skills and lessons while revealing areas for improvement. Responsible credit card use fosters good habits, and mistakes can offer valuable learning opportunities for growth. Applying these lessons can help you become more mature, independent, and responsible in both your financial and everyday life.