As the calendar flips to a new year, many of us are setting resolutions to improve our health, learn new skills, or save more money. But one goal that often gets overlooked is improving our credit score. A strong credit score is essential for securing loans, obtaining favourable interest rates, and even landing specific jobs or rental properties. If you want to boost your credit score in 2025, it’s time to prioritise it.
Here are three New Year’s resolutions to help you raise your credit score:
Commit to Paying Bills on Time
Payment history accounts for a substantial 35% of your credit score, making it the most critical factor in determining your score. Missing payments or having late payments can significantly damage your credit standing. For many, this is an easy area to target for improvement in the new year.
Tip: Automate Your Payments
One of the best ways to ensure you never miss a payment is to set up automatic payments for all your bills. Most banks and service providers allow you to schedule automatic payments from credit cards and mortgages to utilities and subscriptions. By doing this, you’ll avoid late fees and ensure that your payment history remains positive, which will help your score over time.
If you’re concerned about having enough money in your account to cover automated payments, consider setting up reminders or alerts a few days before each payment is due. This will allow you to adjust your spending if necessary. Also, if you can’t pay the full amount, try to make at least the minimum payment. This will still count as on-time, preventing negative marks on your credit report.
Tip: Use Bill Payment Apps
Several apps help you keep track of due dates and make payments automatically or remind you of upcoming bills. Apps like Mint, Prism, and others can send reminders to your phone, helping you stay on top of your bills and avoid late payments.
Reduce Credit Card Balances
Credit utilization—the percentage of available credit you use—makes up 30% of your credit score. The general rule of thumb is to keep your utilization ratio below 30%. If you’re using too much of your available credit, your credit score could take a hit, even if you make your payments on time.
Tip: Pay Down High-Interest Debt First
In 2025, commit to reduce your credit card balances. Start by tackling the cards with the highest interest rates, as they cost you more in the long run. This will free up available credit and lower your credit utilization ratio, helping to improve your score.
If you carry balances on multiple cards, consider consolidating them with a personal loan or a balance transfer credit card offering 0% interest for an introductory period. This can make it easier to pay off your debt faster without accumulating more interest, which boosts your financial health.
Tip: Use a Debt Snowball or Debt Avalanche Strategy
When deciding which debt to pay down first, you can choose between two strategies:
- Debt Snowball: Pay off your smallest balance first. Once it’s paid off, move to the next smallest balance. This approach can help you build momentum and stay motivated.
- Debt Avalanche: Pay off the highest-interest debt first. This saves you more money in interest over time, but it might take longer to see progress.
Both strategies are effective; it just depends on what motivates you most.
Tip: Set a Target Utilization Ratio
Aiming to keep your credit utilization ratio at or below 30% is a good goal, but if possible, you should aim for an even better ratio, like 10-20%. If you’re actively working to raise your credit score, lowering your credit utilization to below 10% will yield significant benefits, as it shows lenders that you’re a responsible borrower.
Monitor Your Credit Report for Errors
It’s not uncommon for credit reports to contain errors, and these mistakes can hurt your credit score. In 2025, make it a goal to check your credit report regularly for inaccuracies. You are entitled to a free copy of your credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) once every 12 months through AnnualCreditReport.com. If you haven’t checked yours recently, now is the perfect time.
Tip: Dispute Any Errors You Find
When reviewing your credit report, look for incorrect information, such as:
- Accounts that aren’t yours
- Late payments that were made on time
- Incorrect credit limits or balances
- Accounts that have been closed but are listed as open
If you find any discrepancies, dispute them with the credit bureau(s) reporting the incorrect information. The bureau will investigate the issue and correct the error, which can increase your credit score. You can dispute errors online or by mail, which usually takes 30 days for the bureau to investigate.
Tip: Set Up Credit Monitoring
While you can access your credit reports for free once a year, setting up credit monitoring for more regular updates is also wise. Many services offer free or low-cost credit monitoring that will alert you to changes in your credit report. This can be especially helpful if you’re concerned about identity theft or fraud.
Tip: Consider Adding Alternative Credit Data
If your credit history is limited or you’re trying to boost your score, consider adding alternative credit data to your report. This might include rent payments, utility bills, or phone bills. Some services, like Experian Boost, allow you to link your bank accounts to report on-time payments for things that may not typically appear on your credit report. This can improve your credit score, especially for those with thin credit files.
Conclusion
Raising your credit score takes time, but the New Year is an excellent opportunity to set a course for financial success in 2025. By committing to paying your bills on time, reducing your credit card balances, and monitoring your credit report for errors, you can make significant strides toward improving your credit score.
Remember, each small step in these areas can have a lasting, positive impact on your credit. Start with one or two resolutions, and as you build momentum, you’ll likely see your score climb—and your financial opportunities increase—throughout the year.
