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Some great articles to keep you informed
5 September 2025
In Canada, your credit score influences much more than just your ability to borrow from one or multiple lenders. It determines whether you can get a mortgage, your credit card limit, whether you can rent a home, have a phone line, and even secure a job. Yet, despite its critical importance, a large majority of consumers are unaware of the common errors that harm their credit, often in ways that are invisible.
The problem is that some credit bureau errors are so subtle that they occur without you even noticing. Once the damage is done, it can take months—or even years—to repair your credit score. In this blog, we highlight the 10 common mistakes that silently damage your credit report, so you can avoid, correct, and take back control of your financial health.
This is the most frequent and damaging mistake. Your payment history represents about 35% of your credit score and remains on your credit reports for six years. Many underestimate the impact of a single day’s late payment. However, be warned: a bill unpaid for more than 30 days will be reported to the credit bureaus.
Even one late payment can significantly lower your score, ranging from 50 to 150 points, especially if you have a limited credit history.
What to do: Set up reminders or automate minimum payments to ensure you never miss a due date.
Many Canadians never take the time to review their credit report, allowing potentially costly errors to go unnoticed for years.
These errors may include misrecorded payments, fraudulent activity, accounts assigned to the wrong report, or debts that have already been repaid but are still listed as unpaid. Equifax and TransUnion, Canada’s two main credit bureaus, both allow you to access your full credit report for free at least once per year by mail.
There are also two completely free apps that let you review your credit history and spot potential errors. Borrowell gives access to your Equifax report, while Credit Karma allows you to view your TransUnion report.
What to do: Make sure all information is accurate and dispute any anomalies. If you have trouble correcting errors, don’t hesitate to use our services—we’ll gladly assist you.
This is one of the golden rules of credit: never exceed 30% of your available credit, even if you pay the balance in full at the end of the month. Why? Because credit bureaus often check your account balance at the time of evaluation, not after payment.
A low utilization rate signals financial control. Conversely, a high utilization rate may suggest you’re living beyond your means, which can lower your score—even if all payments are made on time.
What to do: Keep balances low (ideally under 30%) or request a credit limit increase to reduce your utilization ratio. Credit utilization is the percentage of your credit used compared to your available limit. For example, if you have a card with a $5,000 limit and a $4,500 balance, your utilization is 90%, which is very high.
Each time you apply for credit—whether a credit card, personal loan, or auto financing—a "hard inquiry" is recorded on your credit report. Multiple inquiries in a short period can signal financial instability or that you are actively seeking credit, which may concern lenders.
Fortunately, Equifax and TransUnion can combine similar applications (auto loans and mortgages) made within 14 days as a single inquiry. However, this does not apply to credit cards.
What to do: Limit applications to those strictly necessary (we suggest no more than five (5) applications in twelve (12) months), shop for loans (mortgage, auto) within a short window so inquiries are grouped, and prioritize "soft" checks (pre-approvals).
Closing an unused credit card may seem like a logical decision to “tidy up” your finances. However, it’s a common mistake that can drastically lower your score. Closing a card reduces available credit, raising your utilization rate, a key factor in scoring. It can also reduce the average age of your credit history, another positive scoring factor.
Example: You have two cards. Card A has a $10,000 limit and 7 years of history. Card B has a $5,000 limit and only 1 year of history. Closing Card A removes a significant portion of available credit and seven years of history, potentially causing a large drop in your score.
What to do: Even if you rarely use a card, it’s often best to keep it open. Make a small monthly purchase, like gas or a subscription, then pay it off monthly. If the card has annual fees, consider converting it to a no-fee version instead of closing it.
Having a credit card is a start, but lack of diversification can limit your score growth. Credit mix represents 10% of your score. Lenders want to see how you manage different types of debt: revolving credit (cards or lines), installment credit (auto or personal loans), and mortgage credit.
Why it matters: A diverse credit profile shows you can responsibly manage different types of financing. It reassures lenders and improves your score. You shouldn’t take loans unnecessarily just to diversify, but strategic and well-managed borrowing can strengthen your profile.
What to do: If you only have a credit card, consider a small personal line of credit or a low-rate loan. Even a modest product, managed well, can enhance your history and improve your credit score over time.
Cosigning for someone else may seem generous, but it carries serious risks for your credit score. As a cosigner, you are legally responsible for repayment. If the borrower pays late, defaults, or declares bankruptcy, your credit report is affected.
The cosigned debt appears on your credit report and affects your debt ratio. Even a single late payment can lower your score, and if the account goes to collections, it may impact your history for years.
What to do: Only cosign if you can cover the debt yourself. Put agreements in writing and ensure access to account statements to monitor payments.
Ignoring unpaid debts is one of the worst personal finance mistakes. Inaction can have serious consequences, especially if the debt goes to collections. A collection account appears on your credit report and can drop your score by over 100 points.
Even after repayment, the collection remains for six years, reducing your ability to get loans, credit cards, or housing. The longer you wait, the harder it becomes to fix the situation.
What to do: Act quickly. Contact your creditor to explore options like payment deferrals or arrangements. Start by paying smaller debts to regain control gradually before tackling larger amounts.
Bankruptcy and consumer proposals are often seen as last-resort solutions for debt. While sometimes necessary, they have a lasting impact on your credit. A consumer proposal is a negotiated agreement to repay part of your debt over time. Bankruptcy discharges most debts but has even more severe consequences.
A consumer proposal stays on your report for three years after release. Bankruptcy remains for six years (first-time) on Equifax, seven years on TransUnion, and up to 14 years for repeat filings. During this period, your score is usually at its lowest, making credit access difficult and costly.
What to do: After bankruptcy or a proposal, you can rebuild credit in 2–4 years by adopting good habits: open a secured credit card, always pay on time, save money, and obtain positive references. The key is to regain control and demonstrate reliability over time.
Credit systems constantly evolve. Bureaus and financial institutions regularly update criteria, practices, and evaluation methods. A common mistake is assuming yesterday’s rules still apply today. For example, since the pandemic, some lenders have tightened approval requirements, and bureaus now offer more accessible free tools.
Ignoring updates can hurt your financial health. You may miss opportunities to improve your score, misinterpret data, or make decisions based on outdated information. Staying informed is essential in a constantly changing financial environment.
What to do: Regularly check Equifax and TransUnion sites, subscribe to reliable sources like the Financial Markets Authority newsletters or bank updates. The system changes, and you must evolve with it.
Your credit score is more than just a number. It affects many aspects of your financial life, from getting loans to buying a home and the interest rates offered. Errors that harm your score are often subtle, but with vigilance, they can be avoided. The ten pitfalls described—from missed payments to mishandled bankruptcy—highlight the importance of a proactive approach.
Fortunately, it’s always possible to recover. By being disciplined, regularly monitoring your credit report, and adopting good habits, you can correct past mistakes and position yourself for future success. A good credit score can open many doors, while a poor one can close them just as quickly.
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