5 Strategies to Restore Your Credit Score in 2025

Positive credit scores are often the sum of good financial decisions, consistency and discipline. Low credit scores, on the other hand, can be a combination of many factors.

In the current economy, you could be cash-strapped, ridden with debt, feeling the burdens of a cost-of-living crisis, or a combination of all three! No one would blame you if you felt that having a good credit score in these trying times seems like a mirage.

The good news is that credit scores are not hard to improve. They do require a bit of financial discipline, careful planning and time. But it’s not as impossible as you think.

Importantly, having a good credit score is not just for the optics. It comes with many benefits, such as lower interest rates, saving money on insurance, and higher credit limits.
That’s why, in this article, we bring you 5 simple yet effective strategies to restore your credit score in 2025. So let’s get started.

1. Starting at the Base: Check Your Credit Score

Lenders look into scores that are generated by Credit reference agencies (CRAs) such as TransUnion, Experion and Equifax. All 3 CRAs use different criteria to measure your credit score; as a result, your score may vary slightly across all three credit reports.

These reports are free to use and will give you & a potential lender a good picture of where you stand financially. You can also try using online tools like ClearScore, Natwest and CreditKarma that use data from the abovementioned CRAs.

Knowing where you stand with your credit score can help you determine your next steps—whether that involves scaling back your expenses, taking a bad credit loan (for those who have low credit scores), finding a gap to save more money, or eliminating your debts.

Regular monitoring of your credit score can also help you spot errors sooner & avoid potential fraud activity, ensuring your credit score is always accurate and healthy.

2. Take a Debt Consolidation Loan

Living debt-free is the ultimate goal, and a guaranteed way to improve your credit score is to eliminate as many debts as possible, quickly. Eliminating or minimising debts can seem like a daunting task that overwhelms you.

Fortunately, there are different ways to reduce your debt, you just need to find the right strategy that works for you. For example, it is a well-established notion to consider a debt consolidation loan if you have more than one high-interest loan to tackle.

You may wonder how that works, but here’s the deal. Debt consolidation loans come with low interest rates. While they may not reduce the amount to be paid, they can simplify multiple high-interest loan amounts to one lump-sum repayment amount to a single lender.

In other words, you’re taking a low-interest loan to repay all your high-interest debts. This way you end up lowering the number of active loans in your report – a key factor in improving credit history.

Can you take a debt consolidation loan if you already have a poor credit score or have no credit history at all? Probably not, but a ‘bad credit loan’ might be your best bet.

While these are not advertised as such, they may offer a comparatively lower interest rate than the sum of all your high-interest loans. When used sensibly, bad credit loans can come in handy in improving your credit score. Some low credit loan examples include secured loans or guarantor loans. Their main purpose is to boost borrower reliability, something lenders would always find reassuring. The key thing is to be consistent in making your repayments. Gradually, this would reflect positively on your credit history and help you get better interest rates in the future.

3. The Importance of Regular Bill Payments

Your lender takes the potential risk of not receiving repayments every time they decide to lend you credit. It’s natural for them to look for reliable borrowers and those who make payments regularly. That’s why even one skipped payment can affect your credit score negatively.

This, as a result, sends a message to the lenders saying you can’t be trusted with repayments. Not only can this impact your chances of accessing credit in the future, but it also reduces your credit score after a rejected application.

Most lenders consider your credit history report as part of their due diligence. That’s why the way you handle your bills and repayments will determine how reliable you are as a borrower. This indirectly reflects on your credit score and is all the more reason to stay on top of your bill payments.

4. Negotiate for Higher Credit Limits

Negotiating your way with your lender to provide for a higher credit limit is going to need some finesse on your part. Since your lender benefits from giving you credit, he’s likely open to negotiating. Getting a higher amount of credit availability means a decrease in your credit utilisation ratio. This is especially relevant if you’ve had an increase in your income sources since your last credit application.

However, it’s crucial to remember that this by no means should be an excuse to increase your expenses or put items on credit when they can be paid off immediately. It is simply a way to have a healthy credit utilisation ratio, which can effectively improve your credit score.

5. Choosing Your Credit Option Wisely

A diverse credit portfolio is also another option you can consider. Commonly referred to as a credit mix, a diversified credit portfolio shows lenders that you can handle the management of different types of credit resources.

With the help of financial products like loans, overdrafts, credit cards, mortgages, etc., you can present a combination of credit types in your report. Lenders view such credit mixes positively, as it helps them realise that you are capable of effectively managing different types of credit. What’s important is the ability to pay those off consistently with monthly payments. So make sure you are consistent and on time with your repayments.

Conclusion

With the steps outlined above and some time and patience, you can start noticing improvements in your credit score as early as 3 months. Though it may take longer to have a significant impact on your credit history, it’s a great start.

Having a less-than-ideal credit score is no cause for worry if you’re doing your best. However, it’s important to understand that a positive credit score comes with several financial benefits over a low credit score.

Here’s to a better credit score and financial freedom in 2025!