Filed under: Debt

Finance experts will tell you that it’s important to keep a close eye on your credit record, for a number of reasons. First of all, a good credit history is the key that opens many doors for you. Not only does it mean you’ll have a superior chance of buying a home and getting a good rate on a loan, it also has other implications.

Your credit history determines whether you’re eligible for a credit card, what your interest rate will be, and whether you qualify for any special promotions. Some employers will do a credit check before hiring you, so that’s another place a good credit record comes in handy.

Insurance companies check your credit and factor that in when determining your rates. Superior credit means superior insurance rates. It’s also important to keep an eye on your credit record to make sure no one has stolen your identity and that no credit card company has made a mistake in reporting your activity to the credit reporting agencies.

You can keep up with your credit for free! The first and easiest way to do this is through the free annual credit report program required by law. Each of the three credit reporting agencies must give you one copy of your credit report for free each year if you as for it. All you’ve to do is visit annualcreditreport.com to begin the process. I suggest that you space out your requests throughout the year to make the most of these free reports. Get one at the beginning of the year, another one in the beginning of summer, and the last one in fall. The next year, start the process over again.

There are other ways to get access to your credit information too. If you’re denied credit by any credit card company or bank, you have a right to get a copy of your credit report for free. This is required by law, and you should take advantage of it. You will get a notice from the company you applied for credit with, and they’ll tell you which credit reporting agency they used. Follow the instructions to get your report from that bureau at no charge.

There are other services out there to help you check and monitor your credit that state they’re “free.” Read carefully and follow all instructions so you don’t end up paying for something you didn’t want. The credit reporting agencies are trying to make money by selling you credit scores and monitoring services that aren’t often all that they’re cracked up to be.

This week I took advantage of a “free” offer to see my credit score and some other information in my credit file. I did it because I was curious about my score, and the free annual credit report required by law doesn’t include the credit score. I signed up for a service that let me see the score and then immediately called to cancel it. I was within my one week “free trial” period, so I’ll not be charged anything for the service. But many consumers forget to call and cancel or they call too late. That’s what the companies are counting on to get your money. The services they’re selling usually aren’t worth the money, so sign up with caution.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

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Filed under: Borrowing, Cards, Debt

Lita Epstein is WalletPop’s resident credit score expert. Write to her in the comments box below.

Many of the questions I receive relate to credit scores and how to improve them. There are several myths out there which I debunk below, but first let’s take a look at what a credit is and who creates it. Actually there isn’t just one type of credit score. The primary driving force behind most of them though is the Fair Isaac Corporation, known by most as FICO.

Each of the three credit reporting agencies has a score developed by FICO. Equifax’s is called BEACON, TransUnion’s is called FICO Risk Score and Experian’s is called FICO II. Each one is tweaked slightly differently, so you’ll find your credit score is not exactly the same at each agency, but scores are usually within 20 points of each other. If you find a greater difference, one or more of the credit agencies probably have inaccurate information in your credit file.

In addition to these three types of scores, there are new scores from Fair Isaac called NextGen. The names given to these new scores are Pinnacle (Equifax), FICO Risk Score (Experian) and Risk Score Next Gen (TransUnion).

That’s not all. In addition to these scores there is scoring done for insurance companies and others designed for different types of businesses that set up a different set of parameters they want monitored. Insurance companies believe that people with a low credit score tend to file more claims, so in many says your insurance premiums can be higher if you have a low credit score.

So what goes into these scores? Generally your payment history has the greatest impact. For the three key credit reporting agencies, payment history accounts for 35% of your score. The next largest piece of the credit score pie is the amount that you owe, which accounts for 30% of your score. Next in line is credit history, which makes up 15% of your final score. Applications for new credit and types of credit in your record each account for 10% of your score. So 65% of your final score is impacted by whether or not you pay your bills on time and how much you owe.

Here are some of the common myths that need debunking:

Myth 1: Lowering your credit limits can help your score

Myth 2: Close cards to improve your score

Myth 3: You must pay in full to get a good score

Myth 4: Shopping for the best rates can hurt your score

Myth 5: Checking your credit score can hurt your score

Myth 6 : Credit counseling hurts more than bankruptcy

Myth 7: Putting a statement in your credit file can help your score

The most important thing you can do to improve your credit score is to be sure your credit report accurately reflects your credit history. If you don’t know, get a free copy of your credit report from each of the credit reporting agencies. If you see any errors take the time to correct them.

Lita Epstein is the author of more than 20 books including the “Complete idiot’s Guide to improving Your Credit Score.”

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Filed under: Banks, Budgets, Cards, Debt, Saving, The Dolans

Ken and Daria Dolan, America’s First Family of Personal Finance, answer your money questions every Friday.

Dear Ken and Daria,

There’s a lot of controversy over closing credit card accounts after the balance is paid. What should I do?

Alethea

Ken and Daria Dolan offer advice on all of your credit questions and concerns at Dolans.com.

Click here to ask Ken and Daria your question.

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Filed under: Internet, Social Software, web 2.0

Social media tool Chirpscreen is out of beta, and has a few new tricks up its sleeve. When we first looked at Chirp in January, the application was a tool for grabbing images from your Flickr and Facebook accounts and showing them on your Windows desktop. Now Chirp has added support Twitter and eBay. A Mac client is also available.

Chirpscreen comes in two parts: a desktop viewer called Chirpscreen and a screen saver. The screen saver is still Windows-only, but Chirpscreen Desktop runs on Macs and Computers.

When you first run Chirpscreen, you’ll be presented with a slideshow of Flickr pics. But you can enter your login details for various social networks in order to see content from your contacts, including Facebook and Flickr images and Twitter messages. You can also enter keywords to see an assortment of images from public Flickr photostreams and from eBay.

Chirpscreen Desktop also lets you respond to Twitter messages or leave comments on Facebook images. It’s also simple to share Flickr images via email or through Facebook.

[via WebWare]

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Filed under: Rumors, Financials and analyticals, Raising money, Texas Pacific Group, Merrill Lynch, Investments

A report inthe Financial Times says that Merrill Lynch & Co. Inc. (NYSE: MER) is holding speaks with TPG about forming closer ties. This might include the possibility of the private equity firm investing in Merrill Lynch if the investment bank needs more capital. John Thain met with key executives from TPG according to the report.

The companies have apparently been in discussions since last fall. One affiliate had offered to put in as much as $3 billion into Merrill Lynch. Merrill Lynch raised some $12+ billion in funds elsewhere for different terms.

What’s interesting here’s that the article notes that TPG doesn’t want to appear too close to Merrill Lynch, because of the appearance of being too close to a competitor.

The company has also raised additional funds this month by selling fixed income and preferred securities.

John Thain’s suspenders and belt might be a tiny tighter since he went on record saying Merrill Lynch won’t need any more capital.

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Filed under: Management, Raising money, Engagements

We’ve been digging around for the the coming layoffs at private equity firms to get a good handle on just what the economic downturn and credit crunch will mean to all the B-School children who wanted to be the next multi-millionaires and billionaires. While no hard numbers are out industry-wide yet (at least that you can hang your hat on), there are some things trickling out.

The Deal Journal, of the Wall Street Journal, noted in a post today that American Capital Strategies (NASDAQ: ACAS) plans to let go an unspecified number of staffers in middle markets. As you can see in the chart below, they’ve had their fair share of pain in the process.

Dan Primack, of Private Equity Hub, also wrote a piece noting that no one is getting hired in finance anymore, so he linked to an M&A article about “how to get fired.“

Our own Zac Bissonnette wrote here on BloggingBuyouts at the end of February about how M&A was down so much that dealmakers were set for huge layoffs.

But here we’re at the end of April and no major firings have come the way of dealmakers. Since they cannot all jump into “distressed mortgages and loans” and since they can’t all go to work for a SPAC immediately, it seems only a matter of time and that time is sooner rather than later.

The one thing you can bet on is that there won’t be press releases out of private equity firms. They are private for a reason, well most are still private. When the news does come out it’s probably safe to assume that the firms will state this is merely a reflection of the current conditions or something of the like. Just keep in mind that companies don’t fire waves or groups of workers if they think they’ll be needed in a few months time.

Who knows, maybe they will just announce worker furloughs through the end of summer.

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Filed under: Raising money, Warburg Pincus, Private equity industry, Investments

Warburg Pincus has recently announced the closing of a $15 billion global private equity fund, Warburg Pincus Private Equity X. Many existing investors increased funds to WP X and includes various investors such as public and private pension funds, endowments, and global financial institutions such as Washington Say Investment Board and GE Asset Management.

Warburg Pincus currently manages over $35 billion in assets globally. The global fund will focus on businesses in any growth stage in core industries in North America, Europe, and Asia. The company invests across geographies, industries, and business growth stages from a single global fund, always with a focus on growing businesses and growing regions.

They’ve significant experience in consumer and retail, energy, financial services, healthcare, life sciences, industrial, technology, media and telecommunications. Typically, Warburg provides funding for the creation of business or to expand them where long run growth and sustainability is a central factor.

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Filed under: Raising money, Morgan Stanley Capital Partners, Engagements, Investments

Morgan Stanley (NYSE: MS) looks like they are getting busy on the private equity side, while others are not.

The investment banking, brokerage, and private equity firm plans to launch a private equity unit in India Might 1, using funds from its Asia-specific private equity fund for $1.5 billion that closed last year. Reuters has reported that the unit will be managed by Aluri Srinivasa Rao. Previously, he worked at ICICI Venture of ICICI Bank, India’s No. 2 lender. Morgan Stanley already has an investment bank and an asset management firm in operation in India, and the private equity growth in India is a response to India’s rapid economic growth and opportunities. The report also noted that The Say Bank of India reportedly is in speaks with multiple foreign firms to start private equity funds in India.

Morgan Stanley’s real estate fund, Special Situations Fund III, completed its third offering in a report by MarketWatch raising $2.5 billion. Most funding came from foreign investors. The completion of this fund brings the total Special Situation funding to $5.9 billion.

Raising “funds” isn’t necessarily the same as entering deals, but generally the latter follows suit for a portion of the funds.

Jon C. Ogg is the editor of the Special Situations newsletter for 247WallSt.com.

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Filed under: Raising money, Venture capital industry

While venture capital investments are still strong, the rate that VC’s are putting funds into ventures appears to be slow. A MoneyTree Report from PricewaterhouseCoopers (PwC) and the National Venture Capital Association (NVCA) based on data provided by Thomson Reuters shows these trends this day.

Investment levels and deal volume dropped, but the report says that venture capital remains strong with deep pockets this quarter with what is still the fifth highest level of investment since 2001. Venture capital investments totaled $7.1 billion in the first quarter of 2008, down 8.5% from last quarter 2007 of $7.8 billion. Deal volume also decreased slightly, down to 922 deals from 1,045 deals.

What industries are taking the bulk of the cash? Life Science (which includes biotech and medical devices) took a third of total cash at $2.3 billion and 24% of deals at 220. The Clean Tech center took $625 million in 44 deals, a 6% dip in investment levels from last quarter. Internet-specific companies tagged $1.3 billion in 195 deals, down 7% from last quarter. Semiconductors saw investment levels going up to $566 million from $458 million. The quarter also saw a trend of decreasing investment levels in companies receiving their first-time financing. Companies receiving first-time financing received $1.6 billion in 294 deals, down from $2.2 billion on 360 deals. Media/Entertainment is the only industry seeing a jump in first-time financing.

This also shows the stages on top of the industries. Seed/early stage companies dipped to $1.7 billion with an average deal size for seed being $3.6 million and $5.7 million for early stage companies. Expansion stage financing stood unmoved at $2.9 billion with an average deal size of $9.0 million. Investments in late stage deals also dropped, hitting $2.6 billion with an average deal size of $9.6 million.

Jon Ogg is a producer and editor of the Special Situations newsletter for 247WallSt.com.

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Filed under: Deals, Management, Raising money, Apax Partners, Bain Capital, Private equity industry, Investments, Value and lack thereof

An article by South-African based Business Report summarizes private equity trends this year amidst the crunched credit markets and slowing U.S. Economy. While it isn’t exactly 2007 or 2006, the numbers are still impressive.

According a Private Equity Intelligence Study cited in the article, in the first three months of 2008, private equity funds have raised $163.5 billion.

Last year, leveraged buyouts tripled the $73 billion posted in the same period this year. This article is also confirming what we’ve started seeing in many such private equity trends for the start of 2008, as it notes that leveraged buyouts are being replaced with distressed debt. That’s amounting to $40 billion being raised by 31 firms so far. For example, Bain Capital’s hefty $13.5 billion fund targets distressed debt, as well as venture and property.

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