You should never do it, ever.

. . . Or so the Neeeeiighsayers want you to think.

There is nothing wrong with using OC's.

There is something with using what is called a "Mary Sue" or less commonly, "Marty Stu." Sometimes it's a "Gary Sue" as well. And for some reason, for some, inexplicable reason, some people automatically assume that every OC is a Sue.

Now, how do you tell the difference?

Sues . . . never, ever, make mistakes. Or do anything bad. Or wrong. Or questionable. When they decide something is right, the world will bend over backwards to make it so, and lose all interesting story-telling aspects in the process.

Sues . . . do not have to go through character development. They have no flaws to overcome. They have no issues to deal with, or challenges to overcome. Anything that gets sent at them, they crush right away.

Example: Your OC gets a letter from a parent who she/he thought was dead, but had actually left them when they were a child for whatever reason.

An OC deals with this by conferring with their friends (who could be either more OCs or canon characters), talking about what to do and how to react. They have to process their emotions and figure what's best for them. Should they leave it alone? Or give their parent a chance to explain themselves?

A Sue . . . . will decide what to do with all the iron courage of a white knight who knows no fear. Or emotions, because getting a letter from their thought-dead parent? Barely fazes them. They don't miss a beat, reacting to the situation like a military captain. And whatever the Sue decides, every other character agrees is the right thing to do, even if it clashes with their canon personality.

Ex: Rainbow Dash is not a very forgiving, trusting sort, so she would recommend staying away from the absent parent. But if the Sue decides to have a heart-to-heart, Rainbow Dash will nod her head like a slave monkey and say "Yes, sir, ma'am! You're absolutely right, ma'am! That is exactly what we should do! You're so right!"

Getting a letter from a thought-dead parent is a very rattling, jarring experience. It's not something you get over in a day, and if you (or your character) say they have, that should be a sign that they're not giving the issue the due attention it needs. NOT a "sign" that they, in the span of six hours or however long their day is, already worked out this complex, ambiguous issue all by themselves.

A well-written OC will have to process, will have to struggle, and will have to overcome challenges. In a story with a villain, an OC may fall into a subtle trap that leaves them in a James Bond-style situation. A Sue will instantly spot the trap, and the villain will appear despite having previously been smart enough to be away from the trap, and then the Sue will beat the villain so bad you'll wonder how the villain lived through being a toddler if he bruises that easily.

So, to summarize:
Good OCs . . .
- make mistakes and learn from them
- develop character
-have flaws
-have little nuances and quirks (ex: Twilight's obsession with scheduling, Rainbow Dash's love of flying)
Sues . . .
-never make a mistake, even when all story logic says they should have. As such, they never learn anything, because they don't have to learn anything because they're perfect already.
-do not develop character - they don't go through changes in thought or beliefs. Nothing ever challenges their perception of the world, because their perception is right and anything else is wrong.
-are absolutely perfect and admired and loved by everybody.
-Are completely static. You are told - told, not shown - everything about them right off the bat, and nothing about them ever changes. Again, because they're perfect.

Stories have to be relate-able in their characters. And we can't relate to a perfect character because none of us are perfect.

Upcoming Threads:
"Emulation Writing"
Advice on Writing Crossovers.
Advice on Writing in First Person

2869941

But when you know the rules well enough, you can find ways to break them, right?

In my unpublished story I ain't your sacrifice I use a Gary Stu, red and black OC as a main character. I couldn't do this story with any other character, it had to be Gary Stu.

2871158

Well, parodies are fine . . .

2871403 Yes, it is kind of a parody, but it only gets revealed at the end. Well, I'll see if I'm right about this when I publish it (by counting the number of downvotes).

I was just trying to create an exception to the rule with this story, but your point still stands solid. Mary Sues are bad for a story.