Credit scores are a tricky thing: Canada’s two bureaus, Equifax and TransUnion, consider their scoring models “proprietary” and don’t disclose their exact methods. As such, there are several half-truths, misunderstandings, and straight-up falsities about the factors that help and hinder on the path to a good credit score.
To demystify the process, here are the top illusions we’ve busted through our credit score myth series:
No, no, and no. Checking your free credit score will not affect it in any way. Here’s where the confusion comes from: There are two types of credit inquiries — hard and soft — but only one will ding your credit score.
When you co-sign a loan for someone, you’re essentially lending them your excellent credit rating. But if they’re late with payments or default on the loan, you’re on the hook — and that will hurt your credit score.
I called this one the most bizarre myth I’ve come across. Credit isn’t inherently a bad thing — abusing it is what gets you into trouble. As long as you pay it off each month, using a credit card is actually the easiest way to build credit.
Myth #4:Does bad credit last forever?
Just as a credit score isn’t destroyed overnight, it takes time to rebuild it. That said, there are several easy steps you can take to begin rehabilitating your credit score. Once you establish healthy habits, the hardest part is waiting.
Is there a credit score myth you’d like us to address? Share it in the comments below.