Many Canadians believe that checking payday loans edmonton no credit check their own credit report or score will negatively impact it. This is not true. When you check your own credit, it is considered a "soft inquiry," which does not affect your credit score. In contrast, when a lender checks your credit as part of an application, it is a "hard inquiry," which can lower your score slightly [2].

Myth 2: Everyone Has Only One Credit Score

Another common myth is that individuals have only one credit score. In reality, Canadians have multiple credit scores, as both major credit bureaus (Equifax and TransUnion) provide different versions of credit scores based on the same underlying data. This means that your score can vary depending on the scoring model used by different lenders [2].

Myth 3: All Credit Scores Are Close in Value

It is a misconception that all credit scores should be within a few points of each other. In fact, it is normal to see differences of 100 points or more between scores from different lenders or scoring models. This variation does not indicate a change in your creditworthiness but rather reflects the different algorithms used to calculate scores [2].

Myth 4: Applying for New Credit Always Lowers Your Score

Many believe that applying for new credit will automatically lower their credit score. However, the impact of a new credit application on your score depends on various factors, including your overall credit history.payday loans scarborough  For individuals with a solid credit history, applying for new credit may not affect their score significantly [2].

Myth 5: Paying the Minimum Balance is Sufficient

Some Canadians think that paying only the minimum balance on their credit cards is enough to maintain a good credit score. While this may prevent missed payments, it can lead to high-interest charges and increase your credit utilization ratio, which can negatively impact your score over time [3].

Myth 6: Credit History from Other Countries Counts

Newcomers to Canada often believe that their credit history from their home country will carry over. Unfortunately, this is not the case. Canadian credit scores are based solely on credit activity within Canada, meaning newcomers must start building their credit history from scratch [3].

Myth 7: Money in Savings Accounts Affects Credit Scores

Another myth is that having money in savings accounts contributes to your credit score. In reality, savings and chequing accounts do not factor into credit scores, which are based on your ability to manage debt and repay loans [3].

Myth 8: Your Credit Score is Based on Income

Lastly, many people mistakenly think that their income directly influences their credit score. However,alberta payday loans credit scores are primarily based on payment history and credit utilization, not income levels. While income can affect your ability to obtain credit, it does not directly impact your score [3].

Understanding these myths can help Canadians make informed decisions about their credit and financial health.