A survey by Equifax suggests a pressing need to bust credit myths held by Canadians
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Just under half of Canadians (46%) would give themselves a C or below on their financial literacy, and that’s due in no small part to confusion on what impacts a credit report and why a good credit score is important.
That was the finding of a survey by Equifax Canada, which revealed that millennials aged 18 to 34 are more likely to check their credit report than older Canadians. A full 60% of millennials said they had checked theirs in the last year, and 39% said they’d done so in the last month. But 25% of Canadians said they have never looked at theirs; among those between the ages of 55 and 64, the percentage reached 32%.
“Not checking your credit report regularly isn’t a case of where ignorance is bliss,” said Julie Kuzmic, Equifax Canada’s director of Consumer Advocacy. “Occasionally there are issues with the data reported to us which could result in inaccurate, incomplete or fraudulent information on credit reports. We cannot help consumers take corrective measures unless they take the time to review their credit history.”
The survey results suggest that Canadians could learn a thing or two from Americans when it comes to credit report literacy. In a similar survey, Equifax found only 9% of American respondents saying they had never checked their credit reports. In addition, just 27% of Americans have never checked their credit scores, in contrast to 52% of Canadian respondents.
“It’s important to know your credit scores because lenders use them to assess the risk of someone not paying them back in a timely manner,” said Kuzmic.
The firm found that some Canadians wrongly thought certain factors negatively impacted their credit scores, including:
- Being denied for credit (54% wrongly thought this is a negative factor)
- Checking one’s credit report (29%)
- Interest rate on one’s credit card or loans (24%)
- A change in salary (23%)
- Participating in credit counseling (14%)
- Motor vehicle record (9%)
- One’s gender (5%)
“[W]hile we’re encouraged that younger adults are checking their credit reports and scores more often, it’s important to note that this younger age group scored lower on their basic understanding of how credit works across the board,” Kuzmic said.
But on the bright side, at least half of Canadians polled correctly said that credit scores are positively affected by:
- Paying one’s bills on time (80% answered correctly)
- Amount owed on credit cards and other loans (74%)
- Types of credit one has (59%)
- Opening new credit accounts (51%)
- Length of one’s history using credit (51%)
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