Abu Qatadah narrated that the Prophet (may Allah’s salah and salam be upon him) said, “I anticipate that for fasting the Day of 'Arafah, Allah will forgive the sins committed in the year prior to it as well as the year following it.” This was reported by Muslim.
An-Nawawi commented, “The meaning here is that the sins committed in two years by the one who fasts this day are forgiven. The scholars have mentioned that the sins intended in the hadith are the minor ones. If they are eliminated (by the fast), then it is hoped that the burden of one’s major sins will then be lightened, and if they do not exist then it is hoped that a person’s ranks (in the Hereafter) would be elevated.”

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Fasting the Day of ‘Arafah for Those with Fasts to Make Up from Ramadan

It is permissible for the one who has missed fasts to fast the day of ‘Arafah because the timespan for making up missed fasts is vast. Thus, if a Muslim were to make the most of the ten days of Dhul-Hijjah by making up for missed fasts, then their reward would be greater.
Al-Bayhaqi reported in his Sunan that ‘Umar (may Allah be pleased with him) said, “There are no days more beloved to me to make up my missed fasts from Ramadan than the first ten days (of Dhul-Hijjah)".

In addition, ash-Shaykh Ibn ‘Uthaymin said, “Whoever has missed fasts from Ramadan to make up for, then it is permissible for them to delay it. However, why doesn’t such a person intend when fasting the Day of ‘Arafah to also make up their missed fasts? If they make an intention to make up their missed fasts then we hope they will receive two rewards: the reward of making up missed fasts, and the reward of performing a voluntary act of worship."