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At the start of a new year, people often commit to improving their finances, which in many cases involves a focus on building credit. If you don’t have a credit card, getting one (and using it properly) may be one of your best options.

Before you start filling out applications, there are a few things you need to do to make sure getting a credit card will help your finances. Too often, people misunderstand or misuse credit cards, damaging their credit and falling into debt in the process.

Do You Have a Credit History?

If you have no loans in repayment or haven’t used credit within the past six months, your credit card options may be limited. You’ll also need to show an income on your credit card application, because no one is likely to extend you credit if you don’t have the means to pay for it.

Before applying for credit, check your free annual credit reports — this pertains to any credit application, not just your first credit card — and make sure they’re accurate. Credit report mistakes have caused many people to be denied credit, but that’s avoidable if you take care of the error before applying.

If you don’t have a credit history, you can still get a credit card, but you’ll likely only qualify for something called a secured credit card. These cards require a deposit — say $500 — that serves as your credit limit, and each month you’ll pay the statement balance on your card. This payment doesn’t come out of that deposit, but if you don’t pay your bill, the card issuer can take your deposit. You can read more here about how secured credit cards work.

Check Your Credit Score

If you have a credit history, you should next check your credit score, because you don’t want to apply for a credit card you won’t qualify for. Here’s why: When a potential creditor checks your credit to help make a lending decision, it results in a hard inquiry on your credit report. Hard inquiries (as opposed to soft inquiries, like when you check your own credit) will shave a few points off your credit score for a few months. That’s not a big deal, but if you apply for a card, get denied and have to apply for another one, you’ve hit your credit twice instead of just once. Those little dings can add up quickly.

To give yourself the best chance of choosing a card you can actually get, get to know your credit. You can see two of your credit scores for free on Credit.com, with updates every 14 days, and you can use that information to browse for credit cards that align with your standing. Depending on what your credit is like, you may have a few or many options for credit cards. Decide which card to apply for based on how you plan to use it.

What Do You Want in a Credit Card?

Beyond secured cards, credit cards may fall in one of two very general categories: standard cards and rewards cards. Within those groups, you’ll find a wide variety of offerings.

If you’re not planning on paying your statement balance in full every month, a rewards card isn’t your best option. These typically carry higher interest rates than standard cards, and the amount you pay in interest usually negates the value of whatever reward you’ve earned.

There are many situations in which credit cards will cost you money. APR is one. A late payment fee is another. Annual fees are quite common, too, but there are a lot of free options.

The worse your credit standing, the fewer options you have. Still, if you get a standard credit card, keep your spending well below your limit and make payments on time, to build your credit to the point where you can qualify for better cards, like those that reward you with airline miles or cash back. Building credit takes time — and patience — but it’s worth it for when you want to make larger purchases in the future, because people with great credit tend to qualify for the best interest rates. For instance, that can save you a ton of money when you buy your first home. Take advantage of a credit card as the easiest way to build credit, and see how much you can save in your lifetime, just by boosting your credit score.

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