Credit score monitoring is an app or website that shows you your credit score for free, explains what changes it, and alerts you when something new appears on your credit report. A credit score is a number from 300 to 900. It tells lenders how reliably you have repaid loans and credit card bills in the past. A higher score makes a loan easier and often cheaper to get.
The score is not calculated by the app. It comes from a credit bureau, a company that collects every borrower's repayment record from banks and lenders. India has four licensed credit bureaus. You give the app your consent with your PAN and an OTP sent to your mobile number. The app then fetches your report from the bureau. Checking your own score in this way is called a soft enquiry, and it does not lower your score. When a lender checks your score because you have applied for a loan, it is called a hard enquiry. Many hard enquiries in a short time can lower your score.
Consider a graphic designer in Guwahati whose score is 690. The app shows her two reasons. First, she is using 85% of her credit card's limit every month. Second, she paid one EMI 40 days late last year. The app explains that keeping card use below about 30% of the limit, and paying every bill on time, will raise her score. She follows this advice. Six months later, her score is 745.
The app is free, so how does it earn money? It earns a commission when a user takes a loan or a card that the app suggests. Because the app knows the user's score, it can show offers that the user is likely to be approved for. These include an instant personal loan, or a secured credit card for someone with a low score or no score yet. This creates a conflict of interest: the app earns more if the user borrows more.
The credit bureau creates the report. A credit score monitoring app only displays it and explains it. A debt consolidation service goes one step further: it acts on the debts in the report.