There’s a lot of advice out there about credit, and not all of it deserves your trust. Unfortunately, misinformation often spreads faster than facts. At GoDay, we see it all the time: smart, capable people making costly credit decisions because they’ve been misled by myths that sound convincing but couldn’t be further from the truth.
Today, we’re setting the record straight. We’re pulling back the curtain on the most common credit score myths that could be hurting your financial future, and explaining how credit scores work in Canada, in real, simple terms.
Because the more you understand, the more power you have over your financial life.
The Numbers Behind the Myths: A Snapshot of Canadian Credit Trends
Understanding the real impact of credit habits starts with the facts. Recent data from Statistics Canada reveals that in December 2024, household credit liabilities rose by 0.5% (+$13.9 billion), reaching a total of $3,033.4 billion. Notably, credit card debt with chartered banks increased by 1.5% (+$1.6 billion) during the same period.
These figures highlight the importance of managing credit wisely. For instance, carrying high balances on credit cards can negatively affect your credit utilization ratio, a key factor in credit scoring models. Additionally, the rise in household credit liabilities underscores the need for financial literacy and proactive credit management.
By staying informed and making strategic financial decisions, you can navigate the complexities of credit and work towards a healthier financial future.
10 Credit Score Myths Canadians Need to Stop Believing
Some credit myths sound convincing enough to pass for truth. But if you’re basing your financial decisions on bad information, you could be doing real damage. Here’s what you need to know, and what you need to unlearn.
Myth #1: You Only Have One Credit Score
It’s often said that there’s a single credit score attached to your name, one number that defines your financial worth.
In truth, you have multiple credit scores, and they may not all look the same. Different lenders, banks, and financial institutions may use different models (like FICO or VantageScore) or pull from different credit bureaus (Equifax or TransUnion).
This also means your score might vary slightly depending on how it’s reported in different locations in Ontario or across Canada, based on local lender preferences.
Understanding the number and variability of credit scores gives you a fuller, more accurate view of your financial profile.
Myth #2: Checking Your Own Credit Hurts Your Score
A lot of Canadians think that checking their own credit report will lower their score.
But checking your own credit is considered a “soft inquiry,” and it has no negative impact on your score. Monitoring your own credit regularly can actually help you catch mistakes early and stay in control.
If you’ve never reviewed your report before and want to know how it works, you can request your file directly from Equifax or TransUnion, no damage to your score involved.
Myth #3: Carrying a Balance Improves Your Credit Score
Many people believe that carrying a balance and paying interest shows lenders you’re responsible.
But carrying a balance month-to-month does more harm than good. Instead of helping you, it increases your utilization ratio and interest payments. You’re better off paying off credit card debt in full each month to maintain a healthy credit profile and avoid unnecessary charges.
Myth #4: Paying Off Old Debts Erases Them from Your Credit Report
Some people think that once a debt is paid, it immediately disappears from your credit report.
Paying off debts is always a smart move, but settled or paid accounts can remain visible for up to six years in Canada. Being aware of the consequences of paying off or settling debts helps manage expectations and keeps you focused on the bigger picture: long-term credit health.
Myth #5: Income and Age Directly Affect Your Credit Score
It’s a common assumption that higher income or getting older automatically boosts your credit score.
However, your salary, job title, and age aren’t factored into credit scoring models at all. Credit scores only look at how you manage your debt and repayment obligations — not your paycheck size. That’s why even if you’re balancing a tight family budget, you can still build excellent credit with smart habits.
Myth #6: You Should Close Old Accounts You Don’t Use
A lot of people assume that closing an unused credit card helps simplify finances and improve credit health.
But closing old accounts can backfire by reducing your available credit limit and shortening your credit history. Knowing the effect of closing or opening credit accounts is essential if you’re serious about protecting your score.
Unless a card has hefty fees or risks, it’s often smarter to leave it open and unused.
Myth #7: Credit Repair Companies Can Erase Negative Information
It’s often marketed that credit repair companies can make bad credit disappear.
While these services can assist with correcting errors, they can’t remove accurate, negative marks from your credit history. If you’re feeling overwhelmed and needing debt relief, remember: improving your credit takes time, patience, and positive habits, not shortcuts.
Myth #8: Approval Odds Depend Solely on Having a Good Credit Score
Some believe that having a high score automatically guarantees loan approval.
While a good credit score helps, lenders consider a broader picture: income, employment stability, outstanding debts, and financial obligations. Using Canadian budgeting apps can strengthen your financial profile beyond just your credit score and help you qualify for better terms.
Myth #9: Using Your Entire Credit Limit is Fine as Long as You Pay It Off
It’s a popular myth that maxing out your card is harmless as long as you clear the balance each month.
Even if you pay it off later, high reported balances can hurt your credit utilization rate when lenders review your account mid-cycle. That’s why managing credit limit usage and its impact on your score matters, always aim to keep usage below 30% of your available limit.
Credit: Getty Images
Myth #10: Once You’ve Built Good Credit, You Don’t Need to Think About It Anymore
Some believe that once you hit a great score, you can set it and forget it.
But credit health is ongoing. Your score can drop if you stop paying attention, miss payments, or overextend yourself. If you ever find yourself needing financing, exploring smart ways to use a loan can be a helpful strategy, but keeping an eye on your credit remains critical.
Quick Recap: What Actually Affects Your Credit Score
If you take away just one thing today, let it be this: your credit score is shaped by your financial behaviors, not by myths or luck. Here’s what really matters:
- Payment history: Are you making payments on time?
- Credit utilization: Are you keeping balances low relative to your limits?
- Length of credit history: How long have your accounts been active?
- Types of credit used: Do you have a mix of credit cards, loans, and other credit?
- New credit activity: Are you applying for lots of new accounts at once?
Understanding how it works, from how short-term loans impact your financial picture to how repayment behavior is reported, can help you make smarter decisions that strengthen your credit over time.
Focusing on these real drivers is the smartest way to build a stronger financial future.
Why Understanding Credit Scores Matters More Than Ever in 2025
In 2025, credit is woven into every part of life, from renting homes to qualifying for car loans or securing emergency funding.
Understanding how credit scores work in Canada today protects your future options. Whether you’re building your career, expanding your family, or planning a major move, financial literacy is the foundation of flexibility.
At GoDay, we’re committed to empowering Canadians to make informed, confident financial choices, not just for today, but for every tomorrow. With services available across different locations in Ontario, we’re proud to support communities with the tools and resources they need to navigate their financial journey with confidence.
Knowledge is Credit Power
There’s no shortage of myths when it comes to credit, and believing the wrong ones can cost you real money, opportunities, and peace of mind.
At GoDay, we’re passionate about debunking credit score misconceptions and giving Canadians the straight facts. Because when you understand how credit scores work in Canada, you stop playing defense, and start playing smart.
