Canadian Credit Myths Busted: FAQs and Facts

There are many myths about credit in Canada. Here are FAQs to bust common credit myths and reveal the facts:

1. Myth: Checking my credit score will lower it.

Fact: Checking your own credit score is a soft inquiry and does not affect your score.

2. Myth: Carrying a balance improves my credit score.

Fact: Paying off your balance in full each month is better for your credit score and saves you money on interest.

3. Myth: Closing old credit cards improves my score.

Fact: Closing old credit cards can lower your available credit and shorten your credit history, which can negatively impact your score.

4. Myth: I only have one credit score.

Fact: You have multiple credit scores, as different credit bureaus and lenders use various scoring models.

5. Myth: My income affects my credit score.

Fact: Your income is not factored into your credit score. Your score is based on credit history, utilization, and other factors.

6. Myth: Applying for new credit always harms my score.

Fact: While hard inquiries can temporarily lower your score, responsible use of new credit can improve your score over time.

7. Myth: My credit score is the only thing lenders consider.

Fact: Lenders also consider your income, employment history, and other factors when evaluating credit applications.

8. Myth: Paying off a debt removes it from my credit report.

Fact: Paying off a debt does not remove it from your credit report, but it will show as paid and positively impact your score over time.

9. Myth: All credit scores are calculated the same way.

Fact: Different scoring models may weigh factors differently, resulting in variations in your credit scores.

10. Myth: I don’t need to worry about my credit score if I don’t plan to borrow money.

Fact: Your credit score affects more than just borrowing. It can impact renting an apartment, getting a job, and insurance rates.