Most people don’t realize that understanding credit scores is essential to leveraging travel rewards to their full potential. Too many aspiring travel hackers hold back from maximizing their points earnings because of misconceptions about how credit scores actually work in Canada.
Let’s separate fact from fiction and empower you to build your travel rewards portfolio without unnecessary worry.
Myth 1: Every Credit Card Application Destroys Your Credit Score
The Reality: Hard inquiries have a minimal, temporary impact on your credit score in Canada.
When you apply for a new travel rewards credit card, the issuer performs a hard inquiry on your credit report. Yes, this causes a small dip in your score—typically 5-10 points—but the impact is temporary and usually recovers within 3-6 months.
What matters more is your overall credit management strategy. If you’re maintaining low utilization, making payments on time, and spacing out your applications strategically, the long-term benefits of earning welcome bonuses far outweigh the short-term score fluctuation.
Smart Strategy: Space your credit card applications 3-6 months apart to allow your score to recover between inquiries. The points you’ll earn from welcome bonuses can be worth thousands of dollars in travel value.
Myth 2: Carrying a Balance Improves Your Credit Score
The Reality: You never need to pay interest to build credit.
This persistent myth costs Canadians millions in unnecessary interest charges every year. Your credit score benefits from having active credit accounts and making on-time payments—not from carrying balances month to month.
Pay your statement balance in full every month. You’ll avoid interest charges while still building positive payment history and maximizing your rewards earnings.
Smart Strategy: Set up automatic payments for at least the minimum amount to ensure you never miss a payment, then pay the full balance manually before the due date.
Myth 3: Closing Old Credit Cards Helps Your Score
The Reality: Closing cards can actually hurt your credit score in two ways.
First, it reduces your total available credit, which increases your overall credit utilization ratio. Second, it can shorten your average credit history length, which accounts for 15% of your credit score calculation in Canada.
Keep your oldest credit cards open, even if you’re not using them actively. This maintains your credit history length and keeps your total available credit higher.
Smart Strategy: If an old card has an annual fee you no longer want to pay, call the issuer and request a product switch to a no-fee card instead of closing the account entirely.
Myth 4: Checking Your Own Credit Score Damages It
The Reality: Soft inquiries from checking your own credit have zero impact on your score.
You can check your credit score as often as you want through services like Borrowell, Credit Karma, or directly from Equifax and TransUnion. These are “soft inquiries” that don’t affect your score at all.
In fact, monitoring your credit regularly is a smart practice for travel hackers. You’ll spot errors quickly and track how your credit management strategies are working.
Smart Strategy: Sign up for a free credit monitoring service and check your score monthly. This helps you time your credit card applications for when your score is at its peak.
Myth 5: High Credit Utilization Is Fine If You Pay It Off
The Reality: Your utilization ratio is calculated at statement close, not payment due date.
Credit utilization—the percentage of your available credit you’re using—accounts for approximately 30% of your credit score. Most credit card issuers report your balance to the credit bureaus on your statement closing date, not when your payment is due.
If you’re putting significant spending on your cards to earn points (which you should be!), your reported utilization might be high even if you pay in full every month.
Smart Strategy: Make a mid-cycle payment before your statement closes to keep your reported utilization below 30%. For optimal scores, aim for under 10% utilization across all cards.
Myth 6: You Need Perfect Credit to Get Premium Travel Cards
The Reality: Good credit is usually sufficient for most premium cards in Canada.
While premium cards like the American Express Platinum Card or Scotiabank Passport Visa Infinite do have credit requirements, you don’t need a perfect 900 score. Most issuers look for scores above 660-700, along with sufficient income and responsible credit management.
Focus on building a solid credit foundation rather than obsessing over achieving a perfect score. A score of 750+ will qualify you for virtually any travel rewards card in Canada.
Smart Strategy: If you’re building credit, start with entry-level rewards cards, use them responsibly for 6-12 months, then apply for premium cards once your score improves.
Myth 7: Multiple Cards From the Same Bank Won’t Affect Your Score Differently
The Reality: Each application is a separate hard inquiry, regardless of the issuer.
Some travel hackers believe that applying for multiple cards from the same bank (like several American Express cards) will only result in one inquiry. This isn’t true in Canada—each application generates its own hard inquiry.
However, this doesn’t mean you should avoid having multiple cards from the same issuer. The key is strategic timing and understanding that each application will have a small, temporary impact.
Smart Strategy: If you’re targeting multiple cards from one issuer, space them out appropriately. The points you’ll earn often justify the temporary score impact.
Myth 8: Income Affects Your Credit Score
The Reality: Your income is not a factor in credit score calculations.
Credit bureaus in Canada (Equifax and TransUnion) don’t include your income in their scoring algorithms. Your score is based entirely on your credit management behavior: payment history, utilization, credit age, credit mix, and recent inquiries.
That said, credit card issuers do consider income when evaluating applications. Higher income can help you qualify for premium cards with higher credit limits, which can actually help your utilization ratio.
Smart Strategy: When applying for premium travel cards, include all eligible income sources: employment income, investment income, rental income, and in some cases, household income.
Myth 9: Authorized User Status Doesn’t Build Credit in Canada
The Reality: Being added as an authorized user can help build credit history.
If you’re new to credit or rebuilding your score, being added as an authorized user on someone else’s account (ideally a parent or spouse with excellent credit history) can help establish your credit profile.
The primary cardholder’s payment history and utilization on that account will typically appear on your credit report, helping you build positive credit history without being the primary account holder.
Smart Strategy: Ask a trusted family member with excellent credit to add you as an authorized user on their oldest, well-managed credit card. You don’t even need to use the card to benefit from the positive history.
Myth 10: You Should Only Have One or Two Credit Cards
The Reality: Having multiple cards can actually improve your credit profile when managed properly.
Travel hackers often maintain 5-10+ credit cards to maximize category bonuses, welcome offers, and benefits. When managed responsibly, this strategy can improve your credit score by:
- Lowering your overall utilization ratio (more total available credit)
- Diversifying your credit mix
- Building multiple positive payment histories
The key is never spending more than you can afford to pay off in full each month, regardless of how many cards you have.
Smart Strategy: Build your credit card portfolio gradually. Start with 2-3 cards, demonstrate responsible management for 6-12 months, then strategically add cards that fill gaps in your rewards earning strategy.
Regional Differences: What Makes Canada Unique
Canadian credit scoring has some important differences from other countries, particularly the United States:
Two Major Bureaus: Canada uses Equifax and TransUnion exclusively. There’s no Experian reporting in Canada, unlike the US.
Different Scoring Ranges: While both countries use scores ranging from 300-900, Canadian lenders may have different thresholds for approval decisions.
Credit History Doesn’t Transfer: If you’re new to Canada, your credit history from other countries doesn’t transfer. You’ll need to build Canadian credit from scratch, even if you had excellent credit elsewhere.
Product Switching Flexibility: Canadian banks often allow product switches between credit cards without a new credit inquiry, which is a powerful tool for travel hackers looking to avoid annual fees while maintaining credit history.
Your Action Plan: Maintaining Excellent Credit While Maximizing Rewards
1. Monitor Your Credit Monthly
Use free services to track your score and catch any errors immediately.
2. Keep Utilization Below 30% (Ideally Under 10%)
Make mid-cycle payments if you’re putting significant spending on your cards.
3. Never Miss a Payment
Set up automatic minimum payments as a safety net, then pay in full before the due date.
4. Space Out Applications Strategically
Wait 3-6 months between credit card applications to allow your score to recover.
5. Keep Old Accounts Open
Maintain your oldest credit cards to preserve your credit history length.
6. Leverage Product Switches
When possible, switch to different cards within the same bank to avoid new inquiries.
7. Build Gradually
Start with entry-level cards if you’re new to credit, then work your way up to premium travel cards.
The Bottom Line
Understanding how credit scores actually work in Canada empowers you to build a robust travel rewards strategy without unnecessary fear or hesitation. The temporary, minor impact of credit inquiries is far outweighed by the value you’ll generate from welcome bonuses and ongoing rewards earnings.
Leveraging travel rewards to their full potential requires smart credit management—not perfect credit. Focus on responsible habits, strategic timing, and long-term thinking. Your credit score will remain strong while you accumulate the points that transform the way you travel.
Ready to start building your travel rewards portfolio? Check out our guide to the best credit cards for beginners, or explore our current credit card offers to find your next welcome bonus opportunity.
