Updated: April 2025  |  bremo.io financial guides

Credit Score Myths in Canada — Debunked

Credit score misinformation is widespread in Canada. Myths about what hurts your score, what helps it, and what the bureaus track can lead people to make decisions that backfire. Here are the most common myths — and the facts that replace them.

Myth 1: Checking Your Own Credit Score Hurts It

False. Checking your own credit score is always a soft inquiry, which has zero impact on your score. You can check your score daily on apps like Borrowell or Credit Karma and it will never lower your score. The confusion comes from mixing up soft and hard inquiries — only hard inquiries (from lender applications) affect your score.

Myth 2: You Need to Carry a Balance to Build Credit

False. You do not need to carry a credit card balance and pay interest to build credit. Paying your balance in full every month is ideal. The credit bureaus care that you are using the card and paying on time — not that you are paying interest. Carrying a balance means paying unnecessary interest for zero credit benefit.

Myth 3: Closing Credit Cards You Do Not Use Helps Your Score

Usually false. Closing a credit card reduces your total available revolving credit, which increases your utilization ratio — potentially hurting your score. It also reduces your average account age if the closed card is among your older accounts. Unless the card has a fee you cannot justify, leaving it open and using it occasionally is generally better for your score.

Myth 4: Your Income Affects Your Credit Score

False. Your income, employment status, and savings are not part of your credit score calculation. Equifax and TransUnion do not know how much you earn. Your score is based entirely on your borrowing and repayment behaviour. Income does matter to lenders (they use it to assess ability to repay), but it is separate from your credit score.

Myth 5: Paying Off a Collection Removes It From Your Report

False. Paying a collection account changes its status from "unpaid" to "paid," which is better — but the account still appears on your credit report until it expires (typically 6 years from the date of last activity). The only way to have it removed before expiry is if the collection agency agrees to a "pay for delete" arrangement in writing, which some will negotiate but none are required to do.

Myth 6: Debit Cards Build Credit

False. Debit cards draw money directly from your bank account. There is no borrowing involved, so debit card transactions are never reported to Equifax or TransUnion. The same is true for prepaid cards — they do not build credit history. Only credit products (credit cards, loans, lines of credit) reported to the bureaus count toward your score.

Myth 7: Your Spouse's Credit Score Affects Yours

False (with nuance). Your credit file is yours alone. Your spouse's score does not merge with yours when you marry. However, joint accounts — accounts you open together — are reported on both credit files and affect both scores. If your spouse has a joint credit card with you that they mismanage, that does affect your score. But separate individual accounts remain completely separate.

Myth 8: A Perfect Score (900) Is Necessary

False. Most lenders treat scores above 760 identically. The difference between 780 and 850 is not meaningful for most lending decisions. Chasing a perfect 900 is not worth stressing over. The practical goal is to get above 720 or 760, where you qualify for the best available rates. Beyond that, the marginal benefits become negligible.

Myth 9: Paying Off Debt Immediately Fixes Your Score

Partially true. Paying down credit card balances quickly does improve your score within one to two billing cycles. But paying off old collections or negative items does not immediately restore your score to what it was before the damage. Negative marks stay on your report for their full reporting period even after the underlying debt is settled. The benefit is that a "paid" status looks better than "unpaid" to lenders who pull your report.

Myth 10: Credit Repair Companies Can Do Things You Cannot Do Yourself

False. There is nothing a for-profit credit repair company can legally do for you that you cannot do yourself for free. Disputing errors, negotiating with collection agencies, and requesting credit limit increases are all things any Canadian can do directly. The bureaus and creditors are legally required to work with consumers directly. What credit repair companies charge for is convenience — not unique access or special powers.