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Julie Kuzmic, Equifax Canada's senior compliance officer of consumer advocacy, in an undated handout photo.HO/The Canadian Press

Younger Canadians are checking their credit reports more often than their older counterparts, but still have many misconceptions as to how they work, according to a recent survey.

The poll conducted by credit reporting agency Equifax revealed that 30 per cent of 18– to 34-year-olds checked their credit reports within the last month compared to 25 per cent of those over 35.

Julie Kuzmic, Equifax Canada’s senior compliance officer of consumer advocacy, suspects younger Canadians are checking their reports in higher numbers due the influx of digital-first financial institutions, fintechs and startups that provide free access to credit reports and scores, and specifically target this age group.

“Now it’s so common you can get this information as easily as you can count the likes on your Instagram,” said Bruce Sellery, CEO of Credit Canada Debt Solutions.

And while they’re checking their credit reports more often, Equifax’s survey results show that younger Canadians still believe many myths about credit scores and reports.

When presented with a series of true and false statements, those 18 to 34 were more likely to believe the false statements were true than those 35 and up.

This is likely because younger Canadians haven’t had as much experience as their more senior counterparts in using credit, either through owning credit cards or going through the mortgage application process.

However, they weren’t alone. A significant number of Canadians of all ages mistook false statements as true.

Canadians would benefit from learning how credit works because “it affects your ability to borrow and the rate that you pay when you borrow,” Sellery said.

Also, landlords and employers can perform credit score checks when trying to determine the best candidate for an apartment or job, he added.

The survey revealed that one of the top misconceptions among Canadians is that if you have a good credit score, you’ll always be approved for a loan.

“That’s not necessarily the case because lenders take a lot more into consideration when evaluating a loan application than just a credit score,” Kuzmic said. “They are often looking at employment status, income levels and potential holdings like existing bank account balances.

Many Canadians also falsely believe that credit bureaus can decide whether or not you qualify for a loan.

“Credit bureaus are actually not allowed to make any kind of recommendation on whether or not somebody would qualify for a loan or any type of credit,” Kuzmic said. “That’s entirely in the hands of the lender or the credit issuer or credit granter.”

Credit bureaus, instead, act as an independent third party and receive information from lenders and credit granters on a regular basis about their account holders, Kuzmic said.

One of the other big misconceptions is that you only have one credit score.

“We all commonly use the term as a singular,” Kuzmic said. However, different banks and different lenders use different credit score versions, all ranging between the numbers 300 to 900.

While each credit score is based on information taken from your credit report at the time, credit score calculations can sometimes not take certain factors into account, such as mortgage and cellphone accounts, and they sometimes weigh elements of your credit report differently, Kuzmic said.

“The thing to really focus on is the data in the credit report more than what the actual number of the score is because they’re all calculated using the data in the file.”

And, checking your credit report can be helpful for identifying if any items are inaccurate and negatively affecting your scores.

“If somebody with a similar name and address to you has an item that erroneously lands on your credit report, for instance, that’s going to drag your scores down,” Kuzmic said.

Other myths highlighted by the survey are that higher salaries result in better credit scores, checking your credit reports hurts your credit scores, people who avoid using credit have higher credit scores, married people have a joint credit report and credit reports contain RRSP balances.

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