How to improve your credit score in 2025: practical tips

FICO scores are determined by five factors: payment history, amounts owed (credit utilization ratio), length of credit history, new credit acquired, and credit mix. Paying attention to these factors can aid in improving one's score.

Reviewing credit reports for inaccuracies is crucial. Consumer Reports found that about one-third of consumers have errors on their reports. These mistakes often stem from simple mix-ups rather than malicious activity. The Federal Trade Commission outlines steps for correcting such errors, including requesting free weekly credit reports and submitting dispute letters if necessary.

Another method to boost a credit score is extending available credit. Although it may seem risky, increasing access to credit can improve the utilization ratio—a significant component of FICO scores. Options include requesting line increases on existing accounts or applying for new cards despite potential temporary score drops due to hard inquiries.

Setting up automatic payments helps maintain a positive payment history—the most critical factor in determining a credit score. Reminders or autopay ensure timely payments but require sufficient bank funds to avoid overdraft fees.

Budgeting to pay down outstanding balances is vital as well. Carrying month-to-month balances incurs interest charges that negate card rewards' value. Creating a budget aids in managing old debts or large financed purchases effectively.

Finally, signing up for credit monitoring services like Credit Karma allows individuals to track changes in their scores and address issues promptly.

Maintaining a high credit score enhances approval odds for travel rewards cards and access to installment loans while reducing lender fees and interest rates.