Improving your credit score can significantly enhance your financial well-being.

A strong credit score opens doors to better loan opportunities, making it easier to secure financing for big purchases like a home or car, all while qualifying for the most favorable interest rates.

Whether you’re starting from zero or working to improve an existing score, increasing your credit score in 2025 is an achievable goal. However, reaching an excellent credit score takes time and consistent effort. In this guide, we’ll break down the essentials of credit scores and provide you with the tools you need to elevate your credit in the new year!

1. Check for Errors on Your Credit Reports

Your credit reports contain the data used to calculate your credit scores, but they won’t show your actual scores. It’s essential to check for any errors on your credit reports, as correcting mistakes could improve your score. You’re entitled to a free credit report once a year from AnnualCreditReport.com, but reviewing your reports quarterly or before making a significant purchase is often enough. It's especially important to review your credit report after a data breach or if you suspect identity theft.

Here’s what to look for:

- Incorrect personal information, such as your name, address, or phone number.

- Unknown accounts that may have been opened in your name.

- Payments that were marked late, even though they were made on time.

- Incorrect account balances or credit limits.

- Duplicate listings of the same account.

- Hard inquiries for credit that you didn’t authorize.

If you spot any mistakes, dispute them immediately with the credit bureau that issued the report.

2. Pay Your Bills on Time

Paying your bills on time is the most important factor in building and maintaining a good credit score. Just one late payment (30 days or more past due) can significantly lower your score. Late payments remain on your credit reports for up to seven years, though their impact diminishes over time.

Remember, only accounts that report to credit bureaus—such as credit cards and personal loans—build your payment history. Paying bills like utilities and cell phone bills on time won’t affect your credit unless they go to collections.

3. Become an Authorized User

One way to boost your credit score is by becoming an authorized user on someone else's credit card, especially if they have a strong credit history. As an authorized user, you can benefit from their positive payment history, which can improve your credit score without the responsibility of making payments.

Be sure to get permission before making any purchases on their card. And remember, if the primary cardholder misses a payment or racks up debt, it could hurt your score instead of helping it!

4. Apply for a Credit Card

To establish or improve your credit, getting a credit card is key. If you don't have one, you'll face challenges in building a good credit score. However, getting approved for a credit card can be difficult if you lack a credit history.

Here are some options for first-time cardholders:

Secured credit cards: These require a refundable deposit, which becomes your credit limit. Many offer an upgrade to a regular card after a good payment history.

Unsecured starter cards: These are designed for people with limited or no credit history. Approval may be easier, though interest rates may be higher.

Store credit cards: These cards can only be used at specific retailers and are often easier to get, although terms can vary.

Student credit cards: If you're in school, student credit cards are an excellent way to build credit.

To build your credit effectively, use your credit card responsibly by paying your balance in full every month and keeping your credit utilization below 30% of your credit limit.

5. Consider a Credit-Builder Loan

A credit-builder loan is a useful tool for establishing credit. With this type of loan, you make monthly payments to a bank or credit union, and they report these payments to the credit bureaus. Unlike a regular loan, you don’t receive the money upfront—instead, you get it after completing the term of the loan.

Credit-builder loans are typically offered by community banks and credit unions, with terms ranging from six to 24 months. This is a great option for those who need help getting started with credit.