For millennials, credit can be a somewhat nebulous concept: According to a survey by LendEDU, almost 21 percent of those in this age demographic have never checked their credit score. Many more have FICO scores below what's considered "good credit," or simply do not grasp its implications in the financial ecosystem.

When young professionals and students stay uninformed, problems with credit can sneak up on them and send their entire financial situation into disarray. Today, we'll take a look at some of their mistakes and how to successfully avoid them. 

"No credit?" No good
CNN Money noted that millennials and other young adults may either avoid (or very rarely use) credit for several reasons, including:

• Inability to apply for cards without proof of income: Young people may put it off initially and then forget to apply later.
• Alternative payments - PayPal, Apple Pay, Venmo, LevelUp and others - are more popular than ever.
• Some are simply afraid of credit card debt. 

While the latter of those is understandable, it's no longer an option. It's best for millennials to apply for a credit card with as low an interest rate as possible while they're students - to take advantage of applicable discounts. Then, they can use cards and repay balances often enough to establish a substantive repayment record. 

Misunderstanding credit is dangerous
Credit utilization measures the portion of a credit limit that's being used: e.g., $250 spent on a $2,000 monthly limit equals 12.5 percent utilization. However, LendEDU found that misconceptions abound regarding this. For one, nearly 44 percent of millennials believed intentionally increasing credit utilization is good for one's FICO score. This is untrue. It may actually have the opposite effect. The same goes for deliberately maxing out a card and paying it back on time, which 36 percent of respondents thought might work. Creditors view this as risky regardless of the payback.

Ignore those mistakes and keep it simple. Establish a pattern of spending and repayment, regular or occasional, and creditors will think highly of the practice.

Don't lose track of bills
According to CNN Money, the tendency of millennials to move frequently, compared to previous generations, can impact credit. Neglecting final utility or cable bills before switching residences, or getting seriously behind on rent, are the biggest risks of this kind. While these don't carry as much weight as loans and credit payments, substantially defaulting on them is problematic.

In addition to properly keeping up with these expenses, millennials should consider using alternative credit reporting solutions that analyze a broader spectrum of financial data than FICO. Contact Microbilt today to learn more!