Common credit score myths in Canada, debunked

No, checking your own credit score does not lower it, carrying a balance on your card does not build credit, and your income is not part of your score calculation. These misconceptions circulate widely in Canada and push many people into bad decisions — like paying unnecessary interest or closing cards that were helping them. Here are the five most stubborn myths about your credit score, and what is actually true.

Myth 1: checking your own score lowers it

False. Checking your own score is a soft inquiry: it has no effect on your score, no matter how often you do it. You can check it every week with no consequence.

What can lower your score slightly is a hard inquiry: the check a lender performs when you apply for a card, a loan or a line of credit. The effect is generally modest and temporary, but several hard inquiries in a short period can signal risk.

In practice, checking your score regularly is actually recommended: it is the best way to spot an error or a sign of fraud in your file. Both Equifax and TransUnion let you review your credit report for free.

Myth 2: closing old cards improves your score

It is often the opposite. Closing an old card can hurt your score in two ways:

• Your utilization ratio climbs. Closing a card reduces your total available credit. If your balances stay the same, you are suddenly using a larger share of your credit — a factor that weighs heavily in the calculation.
• Your history gets shorter. The age of your accounts matters too. A card held for ten years shows a long credit relationship; closing it eventually erases that advantage.

That does not mean you should never close a card. If a high annual fee is no longer worth it, or the card tempts you to overspend, closing it can be the right choice for your finances. Just do it with full knowledge, ideally starting with your newest card.

Myth 3: carrying a balance builds credit

This myth is expensive. What builds your credit is using your accounts and paying on time — not carrying debt from one month to the next. Credit bureaus do not reward you for paying interest.

Carrying a balance even has two negative effects: you pay unnecessary interest (often at a credit card APR of roughly 20% or more, as an illustrative figure), and your reported balance increases your utilization ratio, which can lower your score.

The winning strategy is simple: use your card for everyday purchases, then pay the balance in full before the due date. You demonstrate responsible management without paying a cent of interest.

Myth 4: income is part of your score

Your income does not appear in your credit report and is not part of your score calculation. Someone earning $40,000 can have a higher score than someone earning $150,000: it all comes down to how the credit is managed, not the salary.

Be careful, though: lenders do review your income, but separately, when they assess your application. They use it to evaluate your repayment capacity and your debt load. Your score and your income are two distinct criteria in the same decision. To understand what actually makes up your score, see our credit score guide.

Myth 5: everyone has a single score

There is no such thing as “the” official credit score. In Canada, two main bureaus — Equifax and TransUnion — each keep their own file on you, and each bureau can produce several scores depending on the scoring model used.

That is why the score shown in your banking app can differ from the one on a free credit-checking site, or from the one a lender pulls. A gap of a few dozen points is normal and does not mean one of the numbers is “wrong”. Focus on the general trend rather than the exact figure: if your scores are improving everywhere, you are on the right track.

Next steps

Now that the myths are out of the way, focus on what genuinely works: pay everything on time, keep your balances low and let your accounts age. And when the time comes to borrow — for example with a personal loan — always compare several lenders: for the same score, the rates and terms on offer can vary considerably from one institution to another.