5 Canadian Credit Score Myths Busted

5 Canadian Credit Score Myths Busted

Posted on June 15, 2022

We make no secret that these myth busting posts are some of our favourites to put together. We want everyone to have the information they need to make informed decisions and one of the ways we can do that is by correcting these Vineland credit score myths.

Today it’s the turn of the Vineland car loan team to come up with 5 common credit score myths and bust them. Here’s what they have to offer.

1.   You only have one credit score

Not true. In Canada you have two. Other countries can have two or three.

You have one credit score per credit bureau, so here we have two credit scores. One for TransUnion and one for Equifax. Both bureaus work in similar ways but have different ways they go about calculating scores.

2.   Earning lots of money improves your credit score

Not true. Your credit score is a measure of how you handle debt and not about how much you earn. Your income makes no difference to your credit score.

Having a stable job is more important to a lender than how much you earn and still has no place on your credit score. Even then, your employment history won’t appear on your credit report unless you use it in conjunction with an application of some kind.

3.   Your credit score takes a hit if your partner gets into debt

Not true for the most part. Your credit score is your own and is not impacted by other people.

There are exceptions though. If your partner defaults on a joint loan or mortgage, your credit score can take a hit unless you can make the payment.

There is also a thing called financial association. If you have a joint mortgage or auto loan with someone, you can be financially linked to them. This can impact your credit score, but it isn’t common and shouldn’t make that much difference.

4.   Bankruptcy means no more borrowing

Not true. Bankruptcy means you’ll have to work much harder to be able to borrow but does not prevent you from borrowing.

We have a few lenders willing to work with people with bad credit or after bankruptcy. Once proceedings have completed, you can access finance again. It will take a lot of work and a lot of convincing to show you’re a good risk but anything is possible when you put your mind to it.

5.   Paying off all your debts increases your credit score

Not true. You would think that paying off debts would improve your credit score, wouldn’t you? But it doesn’t. If you don’t have debt, how can your score reflect how you handle that debt?

That doesn’t mean you should keep debt for the sake of it. Far from it. Instead, you should continue as normal but not pay off debt just to improve your score. The only time you should do this is to reduce credit utilization and that’s a different subject altogether!

We will use all our skill and experience to deliver the lowest possible Vineland auto loan rates, guaranteed. Contact Car Nation Canada Direct to learn how we can help.

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