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Myths about credit are failing Canadians

May 8, 2019

A credit counsellor and credit bureau director say Canadians still have a lot to learn when it comes to credit literacy.

Almost half of Canadians surveyed graded with a C or below on their financial literacy.  This is according to a recent Leger poll that was conducted for Equifax Canada, one of the country’s two major credit reporting agencies.

Buying a home or new vehicle usually requires something very important, credit.  Poor or no credit history can end up costing you tens of thousands in higher interest payments. And online shopping has made owning a credit card a necessity.  Getting started on a credit history, or re-building credit after a negative life event is seldom sought after by many people.  

Mark Kalinowski is a Financial Educator with the Credit Counselling Society and he gives us some tips.  “Many young people think that the best thing they can do to build credit is to take their credit card and max it right to the top of the limit.” says Kalinowski.  And when it comes to re-building credit, he recommends seeking low-risk credit products such as a secured credit card or RRSP loan.

Aside from credit history, what else are creditors looking for? And what are some common misconceptions about credit files?  Director of Consumer Advocacy for Equifax Canada, Julie Kuzmic says that credit scores are actually not stored on your credit file.  “In fact, scores are calculated based on the data in a credit report when they’re needed.” says Kuzmic.

She adds that applications for credit appear on your credit report as “hard inquiries.”  She says those inquiries can be taken into account when an individual’s score is calculated.  Therefore when a subsequent credit report is ordered by the individual, the new “hard inquiry” from the previous time credit was applied for may negatively impact the overall credit score.

In the Leger poll, over 1,500 Canadians were surveyed.  Out of which a significant number incorrectly identified the following factors as negatively affecting credit scores:

  • Being denied for credit (54 per cent answered incorrectly)
  • Checking your credit report (29 per cent)
  • Interest rate on your credit card or loans (24 per cent)
  • Change in salary (23 per cent)
  • Participating in credit counselling (14 per cent)
  • Motor vehicle records (9 per cent)
  • Gender (5 per cent)


Scores are only part of what a creditor looks at when making a decision. Income, wealth, and holdings that you may have are also important as this assures the lender that there is sufficient cash flow to cover the payments.

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