BMI uses only height and weight and cannot distinguish between fat and muscle. Body fat percentage directly measures the proportion of fat in your body, giving a more accurate picture of health. A muscular athlete can have a high BMI but low body fat.
DEXA scan is the gold standard but is expensive. Practical alternatives include BIA (bioelectrical impedance analysis) scales, skinfold calipers, and hydrostatic weighing. The Navy method provides a free, reasonably accurate estimate using only a tape measure.
A caloric deficit diet combined with strength training and cardio is most effective. However, excessively low body fat is harmful. Aim for 10–20% for men and 18–28% for women as a healthy range.