Top Credit Score Myths

Your credit score is an essential factor when getting a mortgage or loan. The higher your score, the better choices you have for mortgage options. Although many people focus on their credit score, there is still a large amount of confusion around credit score facts.

There’s Only One Credit Score

One of the most common credit score myths is that you only have one score. This would ultimately means that every bank and every financial company would see the same score that you have.

Fact: the truth is that you have more than one credit score in Canada. Your credit scores are based on credit bureaus and reports, which are constantly changing. As well, all banks and financial institutions use different scoring models. From this aspect, they all can’t reach the exact same number.

You Have to Pay to Check Your Score

There’s been a big misconception about checking your credit score. There are many Canadians who believe that you have to pay to check your credit score. 

Fact: No matter what bank you are with, you can check your credit score for free. There are many websites that you can visit to check your credit score. The top credit bureau companies include Experian, Equifax, and TransUnion. 

Tip: Of course, it is essential to understand some consequences of pulling your score too often. If you happen to be house shopping, a bank will require you to pull your score. If numerous banks are pulling your score, not only will they recognize that you have been to other banks, yet it can ultimately lower your score.

A Higher Income Equals a Higher Score

The confusion between income and credit score happens to be another misunderstanding. Some mistake that the higher their income is, the higher their credit score will be.

Fact: The truth is that the two do not affect each other. Of course, having a higher income can help in keeping your credit score high. Yet a credit score will be increased depending on your credit and payment history. It comes down to how you have and are using your money, not how much you have. If you happen to have large debts that still need to be paid or you had a lot of missed bills on your previous credit report, this will ultimately lower your score.  

Whether getting ready for marriage or you are newly married, ensure that you avoid this myth. This credit score is very believable for some, as they believe that their score will become higher combined.

Fact: The reality is that a credit score is solely individually and not for couples. If you happen to have a lower score and your spouse has a higher score, their score will not raise or affect yours. 

You Won’t Be Approved With a Lower Score

One of the most misunderstood credit score myths is that you cannot be approved with a lower score. 

Fact: Many mortgage and loan options are specifically designed for those with lower credit scores. If you happen to find a lender that has these lowered credit score options, then there is no second guessing that you couldn’t get accepted for a mortgage. Another option that many people overlook is co-signing. Even if you couldn’t get accepted on a mortgage alone, if you find someone else to co-sign with you, then you have a much higher chance of getting accepted.

Although some of these credit score myths can seem credible, they certainly are false. If you ever question whether credit score information is accurate, speak with a financial professional, and they will be happy to answer your questions. 

Sources

-Birchwood Credit (2021). 10 Credit Score Myths: List Of Credit Myths You Should Know About. Retrieved from https://www.birchwoodcredit.com/blog/credit-score-myths/
-Braverman, Beth (2022). Don’t Believe These 8 Common Credit Score Myths. Wealth Coach. Retrieved from https://www.cnn.com/2022/03/11/success/common-credit-score-myths/index.html