Establishing a Credit History

• If you ever want to get a car loan, mortgage or any other kind of credit instrument, the lender will look at your credit report to determine how safe a borrower you are. A credit report contains information about your history as a credit user, and if you don't have one, creditors will be reluctant to give you a loan. A credit card allows you to establish a pattern of borrower behavior that lets lenders know how reliable you are.
  
  

Flexibility and Security

• Unlike cash, credit cards allow a measure of security and a paper trail of purchase histories. If you ever lose your credit card or someone steals it, you can report this loss to the credit card company. Under federal law, the credit card company cannot hold you liable for more than $50 of purchases made with your card without your consent, and many credit card companies waive this limit, charging you nothing for unauthorized purchases.
  
  

First Cards

• Once you decide to get a first credit card, you next need to decide what kind of card you should get. Financial adviser Steve Bucci of Bankrate recommends that new card users start with a department store or gas station credit card. Getting one of these cards is typically easier to do than a general purpose card, and you run a lower risk of having your application denied. Denied applications lower your credit rating, making it harder to get new loans.
  
  

Credit Repair

• Consumers can also use credit cards to repair damage done to their credit by previous activity, such as a bankruptcy, collections action or debtor lawsuit. If you want to improve your credit with a credit card, you have to prove to creditors that you use your card responsibly. This means, most importantly, that you have to pay your bills on time every month. You must also be sure to not max out your cards and try to keep any balances down to about 30 percent of your credit limit or less.