Credit Score Myths

November 25, 2020

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Credit reports, credit scores, and everything associated with them can become overwhelming when figuring out fact and fiction. I can guarantee that my father still thinks some credit myths are facts because his father told him and so forth. Some are just so ingrained into us that it can be hard to know what is fact or fiction. 

Let’s break the trend of false credit information and learn what’s a myth and the truth.

Credit Score Myths

Closing credit cards help improve credit health (false) 

When you close a credit card, it affects your credit utilization; This is a huge determining factor that can account for up to 30% of your credit score. Your credit utilization is the total amount of credit you’ve used out of the total amount available to you. The lower your credit utilization is, the more attractive you are to lenders. When you cancel a credit card, it lowers the amount of available credit and raises your credit utilization amount.

They recommend that if you’re going to cancel a card with a higher limit, consider raising your other cards’ limits to make up for the difference of the utilization or to cancel cards with smaller limits and keep the high limit cards.

Co-signing doesn’t affect your credit (false)

Co-signing with a friend or family member on their loan will not initially damage your credit score. Unfortunately, there are possible consequences if they fall behind on their payments or accounts are sent to collection. 

Higher paying jobs raise your credit score (false)

Credit scores are in no way affected by salaries; your credit scores reflect how well you pay your bills and your utilization.

Bankruptcy permanently ruins your credit (false)

Although bankruptcy and consumer proposals affect your credit score, It is not permanent. The following are the criteria for how long a bankruptcy or consumer proposal remains on your credit report. 


A bankruptcy filing remains on your credit report for seven years in Ontario with Transunion and six years with Equifax from the date of discharge. 

Consumer Proposal

Equifax removes a consumer proposal from your credit report three years after you have completed your proposal.

TransUnion removes a consumer proposal from your credit report either:

  • Three years after you have completed your proposal, or
  • Six years after you sign the proposal (whichever is sooner)

When deciding your options for dealing with your debt, a consumer proposal is an excellent method to give your credit score a running start for regrowth and re-establishment.  

Checking your credit score hurts it (false). 

Another pervasive incorrect credit myth we get asked all the time. Everyone out there at one point or another has believed this. Thankfully this isn’t true;

Credit inquiries fall into two categories: soft inquiry (zero penalties) and hard inquiry (may affect your score). 

Checking your credit score using popular services such as Credit Karma, Borrowell, or even your online banking app is considering a soft inquiry. It does not affect your credit score. You can check your credit score without getting penalized for it. Services like Credit Karma or Borrowell allow you to verify your information and accounts. You can also see your credit utilization and get helpful information on areas of improvement.  

A hard inquiry occurs when you apply for a credit card, loans, or related credit products. It can negatively impact your credit score. A hard inquiry will stay on your credit report for up to 3 years, depending on the credit bureau.

When it comes to personal finance, a million different facts are floating around, likely very few are truthful. That is why it’s always important to take what you hear from friends and family with a grain of salt and do your research. It allows you to make the right decisions; to best improve your financial health.

If your credit cards are becoming unmanageable, we understand! With over 15 offices in Eastern Ontario and Western Quebec, we can help with a free consultation to discuss your financial difficulties (613) 237-5555

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