{"id":7941,"date":"2025-05-12T11:32:13","date_gmt":"2025-05-12T15:32:13","guid":{"rendered":"https:\/\/goday.ca\/blog\/?p=7941"},"modified":"2025-11-17T15:03:48","modified_gmt":"2025-11-17T20:03:48","slug":"credit-score-myths-that-are-costing-you-money","status":"publish","type":"post","link":"https:\/\/goday.ca\/blog\/credit-score-myths-that-are-costing-you-money\/","title":{"rendered":"Credit Score Myths That Are Costing You Money"},"content":{"rendered":"\n
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There\u2019s 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\u2019ve been misled by myths that sound convincing but couldn\u2019t be further from the truth.<\/p>\n\n\n\n

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. <\/p>\n\n\n\n

Because the more you understand, the more power you have over your financial life. <\/p>\n\n\n\n

The Numbers Behind the Myths: A Snapshot of Canadian Credit Trends<\/h2>\n\n\n\n

Understanding the real impact of credit habits starts with the facts. Recent data from Statistics Canada<\/a> 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. \u200b<\/p>\n\n\n\n

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.\u200b<\/p>\n\n\n\n

By staying informed and making strategic financial decisions, you can navigate the complexities of credit and work towards a healthier financial future.<\/p>\n\n\n\n

10 Credit Score Myths Canadians Need to Stop Believing<\/h2>\n\n\n\n

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\u2019s what you need to know, and what you need to unlearn.<\/p>\n\n\n\n

Myth #1: You Only Have One Credit Score<\/h3>\n\n\n\n

It\u2019s often said that there\u2019s a single credit score attached to your name, one number that defines your financial worth.<\/p>\n\n\n\n

In truth, you have multiple credit scores<\/a>, 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).<\/p>\n\n\n\n

This also means your score might vary slightly depending on how it\u2019s reported in different locations in Ontario or across Canada, based on local lender preferences.<\/p>\n\n\n\n

Understanding the number and variability of credit scores gives you a fuller, more accurate view of your financial profile.<\/p>\n\n\n\n

Myth #2: Checking Your Own Credit Hurts Your Score<\/h3>\n\n\n\n

A lot of Canadians think that checking their own credit report will lower their score.<\/p>\n\n\n\n

But checking your own credit is considered a “soft inquiry,<\/a>\u201d 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.<\/p>\n\n\n\n

If you\u2019ve 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.<\/p>\n\n\n\n

Myth #3: Carrying a Balance Improves Your Credit Score<\/h3>\n\n\n\n

Many people believe that carrying a balance and paying interest shows lenders you\u2019re responsible.<\/p>\n\n\n\n

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<\/a> in full each month to maintain a healthy credit profile and avoid unnecessary charges.<\/p>\n\n\n\n

Myth #4: Paying Off Old Debts Erases Them from Your Credit Report<\/h3>\n\n\n\n

Some people think that once a debt is paid, it immediately disappears from your credit report.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

Myth #5: Income and Age Directly Affect Your Credit Score<\/h3>\n\n\n\n

It\u2019s a common assumption that higher income or getting older automatically boosts your credit score.<\/p>\n\n\n\n

However, your salary, job title, and age aren\u2019t factored into credit scoring models at all. Credit scores only look at how you manage your debt and repayment obligations \u2014 not your paycheck size. That\u2019s why even if you\u2019re balancing a tight family budget<\/a>, you can still build excellent credit with smart habits.<\/p>\n\n\n\n

Myth #6: You Should Close Old Accounts You Don’t Use<\/h3>\n\n\n\n

A lot of people assume that closing an unused credit card helps simplify finances and improve credit health.<\/p>\n\n\n\n

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\u2019re serious about protecting your score.<\/p>\n\n\n\n

Unless a card has hefty fees or risks, it\u2019s often smarter to leave it open and unused.<\/p>\n\n\n\n

Myth #7: Credit Repair Companies Can Erase Negative Information<\/h3>\n\n\n\n

It\u2019s often marketed that credit repair companies can make bad credit disappear.<\/p>\n\n\n\n

While these services can assist with correcting errors, they can\u2019t remove accurate, negative marks from your credit history. If you\u2019re feeling overwhelmed and needing debt relief<\/a>, remember: improving your credit takes time, patience, and positive habits, not shortcuts.<\/p>\n\n\n\n

Myth #8: Approval Odds Depend Solely on Having a Good Credit Score<\/h3>\n\n\n\n

Some believe that having a high score automatically guarantees loan approval.<\/p>\n\n\n\n

While a good credit score helps, lenders consider a broader picture: income, employment stability, outstanding debts, and financial obligations. Using Canadian budgeting apps<\/a> can strengthen your financial profile beyond just your credit score and help you qualify for better terms.<\/p>\n\n\n\n

Myth #9: Using Your Entire Credit Limit is Fine as Long as You Pay It Off<\/h3>\n\n\n\n

It\u2019s a popular myth that maxing out your card is harmless as long as you clear the balance each month.<\/p>\n\n\n\n

Even if you pay it off later, high reported balances can hurt your credit utilization rate when lenders review your account mid-cycle. That\u2019s why managing credit limit usage and its impact on your score matters, always aim to keep usage below 30% of your available limit<\/a>.<\/p>\n\n\n\n

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Myth #10: Once You’ve Built Good Credit, You Don’t Need to Think About It Anymore<\/h3>\n\n\n\n

Some believe that once you hit a great score, you can set it and forget it.<\/p>\n\n\n\n

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<\/a> can be a helpful strategy, but keeping an eye on your credit remains critical.<\/p>\n\n\n\n

Quick Recap: What Actually Affects Your Credit Score<\/h2>\n\n\n\n

If you take away just one thing today, let it be this: your credit score<\/a> is shaped by your financial behaviors, not by myths or luck. Here\u2019s what really matters:<\/p>\n\n\n\n