How Credit Sesame Works and Makes Money

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Key Facts

Type

Free credit scores and monitoring

Founded

2010

Cost

Free

Website

creditsesame.com

Credit Sesame is a free credit management service: it shows you a credit score, tracks your debts and suggests financial products based on your profile. You pay nothing because the company is paid by others. Lenders and card issuers pay it when users take up their offers, advertisers pay for space on its website and apps, and investors have funded its growth through repeated venture capital rounds. That arrangement shapes almost everything you see after you log in. Overall, it is a no-cost way to see your score and debts in one dashboard, provided you treat its recommendations as commercial offers from partner institutions and not a survey of the whole market.

What Credit Sesame Is

Credit Sesame (the company is often called Credit Sesame Inc) is a privately held U.S. personal finance company founded in 2010. Its website is creditsesame.com. It describes itself as a credit and financial wellness platform. The idea is that people who understand both their credit and their cash position make better borrowing decisions and end up in a more stable financial position.

The service covers several areas:

• Credit score monitoring and free credit reports
• Identity theft protection
• Credit card recommendations
• Home loan and refinance opportunities
• An online bank account that rewards users for improving their credit

Credit Sesame is not a lender and not a credit bureau. It sits between consumers and the companies that sell credit products. It uses your data to decide which of those products to show you.

How Credit Sesame Works

Signing Up

You can create an account and see your credit score without entering any credit card information, so there is no trial that later converts into a paid subscription. Credit Sesame does ask for your Social Security number, which it uses to match you to your credit file.

Viewing your own score through a monitoring service counts as a soft inquiry. Soft inquiries do not affect your credit score. Applying for a product you find there is a separate step, and that usually involves the lender’s own credit check.

Your Financial Picture in One Place

After signup, Credit Sesame pulls together information about your credit accounts and liabilities from several sources. It shows them in a single dashboard, so you can look at balances, debts and your score side by side instead of logging into each lender separately.

You can also enter and track details for each liability yourself, such as a credit card, auto loan, student loan or mortgage. You can set financial goals as well, for example paying down card debt, lowering your interest costs or getting ready to buy a home. Those goals give the platform more information to work with when it recommends products.

Education and Recommendations

Credit Sesame combines your score with your wider financial standing to offer guidance. That guidance covers how to save money, manage credit card debt, or find alternatives to the products you already hold.

The recommendations are personalized. The company uses algorithms that look at trends and historical behavior in your data and project which credit solutions might fit your circumstances. Two users with different scores, debts and goals will see different suggestions.

The Online Bank Account

Credit Sesame also offers an online bank account that is tied to credit improvement: users earn rewards when their credit scores go up. Pairing a bank account with credit monitoring follows from the company’s view that managing cash and managing credit belong together. The bank account is a separate product from the free score and monitoring service and has its own terms.

How Credit Sesame Makes Money

Credit Sesame has three main sources of operating revenue. Each one connects to the data you give the platform.

Product Referral Revenue

When you build a profile, Credit Sesame can show you offers from banks, card issuers and other financial institutions alongside its feedback on your finances. If you pursue one of those offers and succeed (for example, you are approved for a new credit card), the institution pays Credit Sesame for the referral.

So the company earns money when a user is approved for something, not when a user simply views a score. The more closely an offer matches someone who will be approved, the more likely Credit Sesame is to be paid.

Targeted Offerings

Referral revenue depends on targeting. Once you enter the type of credit card you have, Credit Sesame can look at your transactions and judge whether another card might give you a lower interest rate, a better points system or more favorable credit terms. It earns income when users act on those recommendations, whether the product is a card or a loan.

To see what a better rate can mean, take a hypothetical example. A user carries a $5,000 card balance at 24% APR and is shown a card at 18% APR. If the balance stayed at $5,000 for a year, the interest would be roughly $1,200 at 24% and $900 at 18%, a difference of about $300. This simple calculation ignores compounding, payments, fees and any introductory rate. A real comparison also has to include annual fees, balance transfer fees and whether the user would actually be approved.

The same personalization that can find a cheaper card also decides which offers appear first. A recommendation reflects your profile and the offers partners have placed on the platform.

Targeted Advertising

Credit Sesame also earns revenue by showing third-party display advertisements on its website and apps. These ads come from advertisers, ad networks and content providers. User information may be analyzed for behavioral advertising, which means the ads you see are chosen based on your interests and activity.

Advertising and referrals work together. When the ads match a user’s interests, the user is more likely to click through and apply, which also raises the chance of referral revenue.

What Credit Sesame Says It Does Not Do

Credit Sesame states that it does not sell users’ personal information to third parties, including retailers and advertisers. It makes its money from your data indirectly, by using it to target offers and ads within its own platform, and not by selling the data itself. Using your information for targeting is a different practice from selling it. The privacy policy and ad settings explain how behavioral advertising applies to your account.

How Credit Sesame Is Financed

Because users pay nothing and the company does not sell their data, Credit Sesame relies on advertising, referral revenue and private capital to keep the service free. It has raised money repeatedly from venture investors:

Inventus Capital Partners and Menlo Ventures were early investors. The most recent investor named in the company’s funding announcements is the Healthcare of Ontario Pension Plan (HOOPP), which took part in the $51 million round. That round was announced as funding to expand the financial wellness platform and launch new products.

Venture funding helps explain how a free consumer service can operate. Investors pay for product development and growth ahead of revenue, and they expect a return later through growth in referral and advertising income or through a future sale or listing. Because Credit Sesame is privately held, it does not publish the quarterly financial statements a public company must file.

Strengths and Trade-Offs

What the free model gives you:

• No cost to check your score. There is no subscription fee and no credit card needed at signup.
• One view of your debts. Combining liabilities from several sources makes it easier to see your total obligations and spot which debt costs you the most.
• Personalized suggestions. Recommendations are based on your actual profile and goals, not a generic list.
• Education alongside the data. The guidance on saving, managing card debt and finding alternatives explains what the numbers mean.
• A reward for improving. The bank account links rewards to progress on your credit score.

What it costs you in other ways:

• The recommendations are commercial. Credit Sesame earns money when you take an offer, so the platform has a financial interest in you applying for products. A suggestion can still be a good one, but it is a sales channel as well as advice.
• Your data drives the targeting. You provide your SSN and detailed financial information, and behavioral advertising uses that information to decide what you see.
• Coverage depends on partners. Offers come from institutions that work with the platform, so the best available deal may not appear there.
• The score may not be the lender’s score. Lenders use several scoring models and pull data from different bureaus. The number on a free monitoring dashboard can differ from the one a lender uses when you apply.

Risks to Keep in Mind

Most of the risk comes from what you do with the offers, not from monitoring itself.

Hard inquiries and new accounts. Applying for a recommended card or loan usually triggers a hard inquiry, and opening new accounts changes your credit profile. Several applications in a short period can cost more points than any single offer is worth.

Comparing on the headline feature. A lower interest rate or a richer rewards program is only part of a product’s cost. Annual fees, balance transfer fees, penalty APRs and the end of introductory rates can wipe out the advantage, especially if you carry a balance. The hypothetical calculation above shows the mechanics.

Approval is not guaranteed. A personalized match is a projection from your data, not a decision by the lender. The lender runs its own underwriting.

Sensitive data in one place. An account holding your SSN and a full picture of your debts is valuable to fraudsters. A strong, unique password and account security settings matter more here than on most apps.

Free monitoring does not replace your full credit reports. Under federal law you can get free copies of your reports from each of the three nationwide credit bureaus through AnnualCreditReport.com. Those reports let you check every account and dispute any errors directly.

Who Credit Sesame May Suit

Based on how the service works, Credit Sesame fits people who want to track their credit score and debts at no cost and are comfortable seeing product offers alongside that information. It can be most useful for someone paying down card debt or comparing borrowing options, because the debt tracking and rate-focused recommendations address those tasks directly.

It is a weaker fit for someone who does not want their financial data used for ad targeting, or who wants product comparisons with no commercial relationship behind them. Other free score services use a similar referral model. Our Credit Karma review explains how that service is funded if you want to compare the two before choosing.

Credit Sesame vs. Sesame Credit

The names are easy to mix up, but these are unrelated systems. Sesame Credit, also known as Zhima Credit, is a credit scoring system in China operated by Ant Group, the financial affiliate of Alibaba. It produces its own scores for users of Ant’s services. Credit Sesame is the U.S. company described above, which shows consumers their credit information and earns money from referrals and advertising. Sesame scores belong to Ant Group’s system, not to Credit Sesame.

The Bottom Line

Credit Sesame suits people who want to track their credit score and debts for free and accept seeing partner offers beside that data. It can help someone paying down card debt or comparing loans, as long as they check fees, approval odds and hard inquiries before applying. Anyone uneasy about ad targeting should weigh that trade-off and still review full credit reports through AnnualCreditReport.com.