Credit is a subject that causes intense emotions for many people. Fear and guilt are common among a lot of Canadians when they think about credit. But for some, credit can cause joy.

Joy? you ask. How do I get more of that?

Woman sitting on couch in front of laptop with arms raised over her head in triumph.

The truth is there are many positive things that come with using credit wisely. But to do that, you need to know some basics about credit. Let's debunk some myths.

Myth #1: Making a lot of money will help your credit score and loan qualification

Actually, it's not how much money you make that's important; it's how you use it. Salaries are unrelated to credit scores. Your credit score is carefully calculated by different factors, including your total debt and your payment habits.

Myth #2: Not making late payments results in a great credit score

There’s a reason your payment history only accounts for about a third of your total credit score. Making payments on time is great, but if you have taken on a lot of debt, creditors are aware that one big expense can derail you. So it's wise not to take on too much debt.

Myth #3: Paying off outstanding debt removes it from your credit reports

Nothing gets removed from your credit report unless it's erroneous. Your credit history includes all the details of your debt, but that doesn't mean you can't make positive changes to improve your credit report in the present and the future.

Myth #4: All credit reports are the same

Actually, in Canada, there are two national credit bureaus: Equifax Canada and TransUnion Canada. You should check with both when pulling your report. The reason is that different financial companies report to different credit institutions, and because of this discrepancy in reporting, your credit reports may vary.

Myth #5: Paying cash helps your credit rating

Some people think that avoiding credit cards is a good option, but knowing your payment history is a significant chunk of your credit report, and that comes from managing your credit card wisely. To develop a credit score, you need a credit history.

Ready to make some positive changes?

A Servus financial advisor can help you figure out what products are the best fit to help you create a solid credit history and manage your credit wisely. Call us at 1.877.378.8728 and talk to an advisor today.