--- title: Five credit myths that could be holding you back date: 2023-05-16T09:40:59-04:00 author: Kathleen Haase canonical_url: "https://grantthorntonlimited.ca/en/debt-help-resources/articles/five-credit-myths-that-could-be-holding-you-back" section: Articles --- [ Back to the hub ](https://grantthorntonlimited.ca/en/debt-help-resources/articles) # Five credit myths that could be holding you back Kathleen Haase ![Woman sitting on floor using laptop to research how to improve credit score](https://pr-assets.grantthorntonlimited.ca/craftcmsimages/Article-imagery/Web-image-square/_articleHero/6335/five-credit-myths-that-could-be-holding-you-back.jpg.webp) Kathleen Haase Healthy credit is a key indicator of your overall financial well-being. Credit health is typically determined by your [credit score](https://grantthorntonlimited.ca/en/debt-help-resources/articles/what-affects-your-credit-score)—which provides a snapshot of your credit risk, or the likelihood you’ll pay your bills on time. Lenders may look at your credit score to determine potential risks associated with granting you credit. Despite the importance of understanding credit, [nearly half of Canadians](https://www.canada.ca/en/financial-consumer-agency/programs/research/canadian-financial-capability-survey-2019.html) have never requested their credit report and don’t know their credit score. Not understanding the ins and outs of credit may be holding you back financially—when it comes to credit, what you don’t know *can* hurt you. We’ve debunked five credit myths to help improve your financial health: ## 1. Using a credit card and paying it off right away will improve your credit score. **False** – The date on your credit card statement is the date your financial institution reports your activity to the credit bureaus. If the balance on your credit card is $0 on the statement date, it’s like you didn’t use the card. In this case, credit bureaus wouldn't recognize any positive or negative activity, and your credit score could remain unchanged. If you’re trying to improve your credit score, you could try paying the statement balance in full before the statement date. This date should be clearly labeled on your credit card statement and electronic banking app. If you need help remembering dates, many lenders offer automatic payment options that transfer funds from one account to your credit card before the balance is due. ## 2. Paying off a loan in full will increase your credit score. **False** – Many assume that paying off a loan in full will increase their credit score— this is not the case. Only active accounts can positively impact your credit score. Maintaining an active loan may help increase your credit score because you’re proving that you can make consistent payments. However, once the final payment is made, the account closes and is no longer active. No longer making payments towards the loan means that there is no more positive activity boosting your score. Although repaying a loan in full may slightly reduce your credit score, that’s not a reason to avoid repaying your debts. There are several benefits to closing a loan in full such as bringing an end to monthly payments and avoiding interest charges. ## 3. Checking your own credit report hurts your score. **False** – There are two types of credit inquiries. When a lender checks your credit during the application process, it’s recorded on your credit report as a hard inquiry and may negatively impact your credit score depending on your current standing. When checking your own credit, known as a soft inquiry, there’s no impact on your credit score. Routinely checking your credit is a healthy credit habit. It’s free to check through Canada’s two credit bureaus, [Equifax](https://www.consumer.equifax.ca/personal/products/credit-score-report/) and [TransUnion](https://www.transunion.ca/product/consumer-disclosure), many third-party companies, or even through your bank. If you check your credit score online or using a third-party company, always be cautious when sharing your personal information. If they ask you to pay, it is most likely for a credit monitoring service, which isn’t required to access your credit score. ## 4. After completing a consumer proposal or bankruptcy, you must wait years before you can start rebuilding your credit. **False** – You can start rebuilding your credit immediately by maintaining active credit accounts, such as a car loan. Making on-time payments towards your active credit accounts helps prove that you can make consistent payments and can increase your score over time. Additionally, you can also apply for a secured credit card. This type of credit requires you to pay a cash deposit upfront as collateral on the account. Maintaining active credit or applying for new credit both offer simple opportunities to manage monthly payments and improve your creditworthiness over time. ## 5. When you complete a consumer proposal or bankruptcy, the debts on your credit report should be $0.00. **False** – Creditors may disclose past balances owed to them on your credit report for a [certain amount of time](https://grantthorntonlimited.ca/en/debt-help-resources/articles/what-affects-your-credit-score). Although visible, these accounts will be marked as ‘closed’ and will not impact your credit score. Closed accounts temporarily appear on your credit report to inform potential lenders of your history with credit. If you feel like there is an error on your credit report after completing your consumer proposal or bankruptcy, you must submit a request directly with the credit bureau to have the error reviewed. If you feel overwhelmed by your credit situation and want to make a change that counts, Doane Grant Thornton is here to help. We offer judgment-free, 30-minute consultations to help you find the best path to debt freedom. [Book online](https://grantthorntonlimited.ca/en/get-in-touch/contact-us) or call us today at 1-844-4GT-DEBT, to start your path to a brighter financial future. *The information contained herein is prepared by Doane Grant Thornton for information only and is not intended to be either a complete description of any issue or the opinion of our firm. You should consult your Doane Grant Thornton advisor to obtain additional details and to discuss whether the information provided here applies to your specific situation.* About the Author Kathleen Haase ## Latest articles [ ![](https://pr-assets.grantthorntonlimited.ca/craftcmsimages/Article-imagery/_articleThumbListSmall/67684/assets-CP-square.webp) ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-to-your-assets-in-a-consumer-proposal) [What happens to your assets in a consumer proposal? ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-to-your-assets-in-a-consumer-proposal) [ Read this article ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-to-your-assets-in-a-consumer-proposal) [ ![](https://pr-assets.grantthorntonlimited.ca/craftcmsimages/Article-imagery/_articleThumbListSmall/65155/recreational-vehicle-square.webp) ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-to-an-rv-boat-or-atv-loan-if-you-file-a-consumer-proposal-or-bankruptcy-in-canada) [### What happens to an RV, boat, or ATV loan if you file a consumer proposal or bankruptcy in Canada? ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-to-an-rv-boat-or-atv-loan-if-you-file-a-consumer-proposal-or-bankruptcy-in-canada) [ Read this article ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-to-an-rv-boat-or-atv-loan-if-you-file-a-consumer-proposal-or-bankruptcy-in-canada) [ ![](https://pr-assets.grantthorntonlimited.ca/craftcmsimages/Article-imagery/_articleThumbListSmall/63555/influencer-survey.webp) ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-influenced-into-debt-how-social-media-impacts-canadians-finances) [### Influenced into debt: How social media impacts Canadians' finances ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-influenced-into-debt-how-social-media-impacts-canadians-finances) [ Read this article ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-influenced-into-debt-how-social-media-impacts-canadians-finances) ## Subscribe to our newsletter Get tips and tools to help manage your finances and live debt free. \*I agree to receive communications from Doane Grant Thornton. I understand that I can unsubscribe at any time. ## **Take the first step** to debt freedom Speak to one of our debt solutions professionals during a free, no-obligation consultation. [ Book a free consultation ](https://grantthorntonlimited.ca/en/get-in-touch/contact-us) ## Related articles ![](https://pr-assets.grantthorntonlimited.ca/craftcmsimages/Article-imagery/_articleThumbMedium/67684/assets-CP-square.webp) ### [What happens to your assets in a consumer proposal? ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-to-your-assets-in-a-consumer-proposal) In most cases, a consumer proposal allows you to keep all of your assets while bankruptcy may require you to surrender certain non-exempt assets. [ Read this article ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-to-your-assets-in-a-consumer-proposal) ![Marina filled with sailboats and recreational boats along the Charlottetown waterfront on a sunny day.](https://pr-assets.grantthorntonlimited.ca/craftcmsimages/Article-imagery/_articleThumbMedium/65155/recreational-vehicle-square.webp) ### [ What happens to an RV, boat, or ATV loan if you file a consumer proposal or bankruptcy in Canada? ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-to-an-rv-boat-or-atv-loan-if-you-file-a-consumer-proposal-or-bankruptcy-in-canada) For many Canadians, recreational vehicles offer freedom, adventure, and unforgettable family memories. But if you’ve financed an RV, travel trailer, boat, ATV, snowmobile, or side-by-side, those monthly payments can become difficult to manage if life takes an unexpected turn. [ Read this article ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-to-an-rv-boat-or-atv-loan-if-you-file-a-consumer-proposal-or-bankruptcy-in-canada) ![A woman in scrubs sitting on a park bench looking at her phone, with imagery of social media likes and spending surrounding her.](https://pr-assets.grantthorntonlimited.ca/craftcmsimages/Article-imagery/_articleThumbMedium/63555/influencer-survey.webp) ### [ Influenced into debt: How social media impacts Canadians' finances ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-influenced-into-debt-how-social-media-impacts-canadians-finances) While social media may be free to use, the things it influences us to buy often come at a cost. As influencer marketing continues to grow, more Canadians are making purchases based on what they see online. [ Read this article ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-influenced-into-debt-how-social-media-impacts-canadians-finances) ![A woman sitting with papers and a calculator in front of her](https://pr-assets.grantthorntonlimited.ca/craftcmsimages/Article-imagery/_articleThumbMedium/63201/cp-annulment-square.webp) ### [ What happens if you miss a consumer proposal payment? ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-if-you-miss-a-consumer-proposal-payment) Missing a payment during your consumer proposal can feel scary—but it’s not the end of the road. This article explains exactly what happens if you miss a consumer proposal payment, how to avoid annulment, and what to do if your consumer proposal is annulled. [ Read this article ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-if-you-miss-a-consumer-proposal-payment) ![A young woman sits with and supports an older woman holding a cane.](https://pr-assets.grantthorntonlimited.ca/craftcmsimages/Article-imagery/Web-image-square/_articleThumbMedium/58677/caregiver-article-square.webp) ### [ Tips to avoid debt as a family caregiver in Canada ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-tips-to-avoid-debt-as-a-family-caregiver-in-canada) With the rising cost of living and long waitlists for long-term care, more Canadians are becoming family caregivers, but it can come with an emotional and financial cost. [ Read this article ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-tips-to-avoid-debt-as-a-family-caregiver-in-canada) ![Person packing a box for moving](https://pr-assets.grantthorntonlimited.ca/craftcmsimages/Article-imagery/_articleThumbMedium/57664/adult-child-moving-home-square.webp) ### [ How to budget when your adult child moves back home ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-how-to-budget-when-your-adult-child-moves-back-home) Adult children moving back home isn’t just a trend—it’s quickly becoming the norm. While the cost of living continues to climb across Canada, many Gen Z and millennial Canadians are packing up their apartments and returning to the nest as “boomerang kids.” [ Read this article ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-how-to-budget-when-your-adult-child-moves-back-home) ![Person looking down at bills with head in hand, surrounded by paperwork and an open laptop.](https://pr-assets.grantthorntonlimited.ca/craftcmsimages/Article-imagery/_articleThumbMedium/56923/utilities-square.webp) ### [ What happens if you don’t pay your utility bills in Canada? ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-if-you-dont-pay-your-utility-bills-in-canada) If you’re worried about unpaid electricity, heating, or water bills, you’re not alone. But disconnection isn’t immediate, and you usually have options to protect your service while you get back on track. [ Read this article ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-if-you-dont-pay-your-utility-bills-in-canada)