Teens, credit: what not to do

At 18, American teens can assume control of their legal and financial futures. Yet they need to understand that slip-ups now can affect their futures for years to come, according to Mike Sullivan, director of education for Take Charge America, a national nonprofit credit counseling agency.

So what does it take to build a positive credit history? Sullivan describes what not to do:

+Don't go on a spending spree. Just because you have the credit, doesn't mean you should spend it all. Your first credit card should have a low limit, such as $100 or $500. This will help prevent large impulse buys. If you know you're an impulse shopper, you can further restrict temptation by applying for a store or gas card, as opposed to a general bank credit card that can be used at almost any location.

+Don't test your credit limits. Make a small purchase to kick off your credit history, and then make consistent payments. You don't want to be caught in an emergency situation with a maxed-out credit card. If you withdraw over your credit limit, you will be faced with exorbitant fees. Plus, the overdraw shows up on your credit report, and that could prevent you from receiving other forms of credit at reasonable interest rates in the future.

+Don't share your credit information. No one should have access to your credit information, including close friends. Don't leave your monthly bill in plain sight, nor ask anyone to hold onto your credit card. This could leave you susceptible to fraud and identity theft.

+Don't ignore the fine print. You need to know exactly what you are getting into before you sign the contract. Financial jargon can be confusing, so ask questions if you don't understand the terminology. You will be held accountable for all information listed in the fine print, whether you understand it or not. Be cognizant of over-limit and missing payment fees. How much could these fees potentially cost you? What happens if you miss a payment? Do you have an introductory fixed rate? If so, for how long? Once you have established a line of credit, be sure to examine each monthly bill and take notice of the minimum payment amount, the total balance and the interest rate. Has anything changed? Is there an unauthorized purchase? Call the credit card company immediately if you notice inconsistencies.

+Don't be afraid to ask for help. It's normal to encounter bumps along the road to establishing credit. Have an open dialogue with your parents and ask them to go over your credit card bill if you are confused.

You can also seek the advice of a credit counselor. Visit www.bbb.org to locate a reputable agency.