After the TSP, I invest my money in Betterment and Vanguard. I track all of my investments with Personal Capital. I also wrote a short, 2 hour book summarizing this site. You can buy it here.

This question was recently posed on reddit.com, in the Personal Finance section. The questioner asked what credit score landlords are looking for and how he might improve that score.

Unfortunately, he or she completely missed the point of the credit report that a landlord would pull for a potential tenant. Landlords are not primarily interested in your credit score. They are more interested in your credit report.

The Difference Between a Credit Score and a Credit Report

A credit score is simply a number, usually from 300-850, that rapidly communicates your credit worthiness to a potential lender. Credit card companies, auto dealerships, and cell phone service providers are interested in credit scores because it gives them a rapid snapshot of your credit worthiness. This allows them to make quick decisions when giving you a line of credit, a new car, or a new iPhone.

On the other hand, mortgage companies and landlords (people who own rental properties) are interested in your credit report. This is a much more in depth document, covering many years of your personal and financial history. Since mortgage companies are lending you large sums of money, they take the time to look at your credit report and analyze whether they believe you will be a worthwhile investment of their resources.

What Landlords Look for in Your Credit Report

The same is true of a landlord. They are looking for tenants that will not damage their property or fail to pay their rent on time. Landlords will look at your credit report to see:

  • if you pay your bills on time
  • if you have any public records relating to delinquencies, child support, or bankruptcies
  • past and current residences
  • past and current employment

Therefore, checking your free annual credit report from www.annualcreditreport.com (the only officially authorized source) is more important than obsessing over your credit score. You can get one free report a year from each of the three major bureaus. If you do it right, you can get 3 free credit reports a year (just wait 4 months between pulling a report from each bureau.

2 Websites I Use to Achieve Financial Independence Faster

I have investment accounts all over the place. To keep track of all of them in one place I use Personal Capital. It combines all of my accounts, shows me where I may be overpaying in fees, and provides beautiful charts showing my overall asset allocation and performance.

I use Personal Capital to track my Roth and Traditional TSP, Vanguard IRAs, banking accounts, SDP, and my Betterment taxable account, all in one place. It's free, secure and presents me with a one-stop dashboard so I can see all my money on one site.

Read my full review of Personal Capital and see how easy it can be to manage your investments in one place. Trust me, once you try it, you'll love it.

P.S. - If you have over $100,000 of assets and a 401k, you really need to run the Personal Capital 401k Fee Analyzer.

The best way I know to achieve financial independence is to keep your investments simple, diversified, automatic, and low-cost. Costs eat into your returns like you wouldn't believe! A 1% difference in expense ratios can mean $100,000s lost to fees over a lifetime of investing.

Even if you're a DIY (do-it-yourself) investor like I am, you need to check out Betterment. You can read my full review here, but the bottom line is for only $250 per $100,000 invested (0.25% expense ratio) you get simple, diversified, and automated investing. In addition every account now gets free Tax Loss Harvesting+ features, which should increase returns for the average investor more than the minuscule management fee.

If you're not a DIY investor or are just getting started with investing, then you definitely need to check out Betterment. It's what I recommend to my family and friends who aren't strong investors or don't care to learn about asset allocations, diversification, or rebalancing.

What is a landlord looking for when they run a credit check?

What are your thoughts?