5 Myths Canadians Need to Know About Their Credit Score

Let’s do some myth busting!

When it comes to improving your credit score, knowledge is power. Here are 5 myths that we’re straight up busting to help you get the best of your credit score.

5 Myths Canadians Need to Know About Their Credit Score

Credit scores are awfully shrouded in mystery for something so important. In finance, we do not love ambiguity!

Myth 1: Checking Your Score Hurts It

Checking your credit score does not hurt it. But we know why so many Canadians think this.

When you apply for a loan, lenders perform what’s called a ‘hard inquiry’ on your credit file to see if they consider you a trustworthy borrower. But these hard inquiries will knock a few points off your credit score.

Usually, the damage you sustain is simple to fix with good credit hygiene over the next few months.

Checking your own score, conversely, typically involves a ‘soft inquiry’. These inquiries do not hurt your score at all. You can request a credit report through one or both of the credit bureaus, TransUnion or Equifax, or use another lil old fintech app called Mogo to check out your Equifax credit score.

Myth 2: You Only Have One Score

Double the scores, double the joy! Just kidding. Double the work!

TransUnion and Equifax are Canada’s two credit bureaus. They can use different scoring models, and not all lenders report to or reference both. So when you’re looking to get a sense of your credit score, it’s important to check with both.

Similarly, when performing your annual credit report check for fraudulent or incorrect info (you don’t do this annually? Well… you do now! Right?) you’ll need to request your reports from both bureaus.

Myth 3: Carrying a Balance is Good For Your Score

There’s a myth that carrying a small balance on your card is good for your score. Add a little, pay a little off, rinse and repeat, until you die. But this isn’t true!

When you’re carrying a balance, you’re being charged interest. Making minimum payments or not paying off that balance in full could cost you thousands in interest over time.

What’s actually good for your score? Keeping a low credit utilization ratio and paying off your balance in full, on time.

Myth 4: Closing a Card is Good For Your Score

So you’ve finally paid down your debt—yay! Now, the cherry on top: closing that pesky card that got you into trouble in the first place.

Sigh. Not so fast.

When you close a credit card, your score is likely to take a hit. This is because you’re shifting your credit utilization ratio. What’s that? If you’ve got a limit of $1,000 and you’re carrying $500 of debt, you are using 50% of your available credit. You’ve got a utilization ratio of 50%.

Lenders want you to keep your utilization ratio at or (ideally) below 35%.

Your utilization takes into account all available credit, across all of your loans and credit cards. When you close a credit card, it drops your total available credit and skews your utilization ratio.

As a result, your credit score can take a hit. So when closing a credit card, bear your utilization in mind.

And knowing that your score may take a hit when closing a card, be careful closing cards if you’re in the midst of applying for another loan or a mortgage which will consider your credit score.

Myth 5: You Should Be Ashamed of a Bad Score

Got a bad score?

We’ll tell you a not-so-secret secret: you’ve got nothing to be ashamed of. Yeah, having a bad credit score isn’t ideal, but Canadians wind up with bad scores for all kinds of reasons. It doesn’t make you a bad person, and it doesn’t mean you can’t take steps to nurse your score back to tip-top health.

So don’t be ashamed if your score is a bit worse for wear. Quit saying “my credit score sucks,” and start saying “I’m focusing on improving my credit score!” Doesn’t that sound better?

Help Master Your Credit Score with Mogo

Need a hand keeping an eye on your credit score? We’ve got you covered. Sign up for a MogoAccount and get free monthly credit score monitoring for 90 days. Want more? Get free monthly credit score monitoring for as long as you’ve got a Mogo Visa* Platinum Prepaid Card.1


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Our money management app is here to help keep your spending on track and your credit score in tip top shape.

You know what they say: knowledge is power! Start getting your score on track today with Mogo.

This blog is provided for informational purposes only.

*Trademark of Visa International Service Association and used under licence by Peoples Trust Company. Mogo Visa Platinum Prepaid Card is issued by Peoples Trust Company pursuant to licence by Visa Int. and is subject to Terms and Conditions, visit mogo.ca for full details. Your MogoCard balance is not insured by the Canada Deposit Insurance Corporation (CDIC). MogoCard means the Mogo Visa Platinum Prepaid Card.

1 - Free credit score is provided by Equifax and is only available to MogoAccount holders that have passed identity verification. The Equifax credit score is based on Equifax’s proprietary model and may not be the same score used by third parties to assess your creditworthiness. The provision of this score to you is intended for your own educational use. Third parties will take into consideration other information in addition to a credit score when evaluating your creditworthiness. Equifax® is a registered trademark of Equifax Canada Co., used here under license. MogoProtect identity fraud protection and Credit Score Monitoring are available to all eligible MogoMembers for free for 90 days from the time of initial MogoAccount registration. MogoCard holders will be entitled to receive free MogoProtect identity fraud protection and credit score monitoring so long as they remain active MogoCard holders. If you do not fund your card within 60 days of ordering or make a transaction on your MogoCard for more than 90 days, then you will not be considered “active” and will be opted out of MogoProtect and credit score.