The Universal Default Clause is usually in the Terms of Agreement and allows companies to raise your rates on all your cards even if you have only been late on one!
Credit card companies do a great job disclosing all of their terms and conditions, even though it's in a hard to read font and very small technical language. But failing to understand those terms can be costly!
Most people know that when your bill arrives, it needs to be paid on time or you'll be hit with a hefty late fee. However, many don't realize that paying late entitles the credit card company to raise your interest rate immediately and significantly. And worse yet, paying late on one of your credit cards entitles all your other credit card companies to raise the rates you are paying them as well!
This is called the "Universal Default Clause", and it basically means that if you're late on one credit card account, all your other credit card companies can increase their interest rates too. This can happen even if you have paid your other accounts on time!!!
But the plot thickens, this extends way beyond late payments on credit cards. If your credit card company has the Universal Default Clause noted in their fine print (and most of them do) they can increase your interest rate if a late payment is reported by ANY other creditor, including utility bills, car loans, and home loans!
You better believe they are just waiting for the opportunity to increase your interest rate! This is why they continually monitor your credit report. And just when you thought it couldn't get any worse, it's not just late payments that trigger the Universal Default Clause; interest rates can be increased if a consumer exceeds their credit limit, bounces a check, or applies for additional credit.
All of these factors are signs to the credit card company that a consumer may be turning "high risk." And the penalty? You guessed it, a higher interest rate.
Any time you have questions about credit, credit scores, or the credit reporting agencies, give me a call. If I don't know the answer, I know where to find it.
If you have clients that are credit challenged, there is absolutely hope available! They do not have to have perfect credit to obtain home financing. Don't throw those deals in the trash can until you have talked with me. Let my knowledge and experience work for you.
USCCRA, LLC is excited to offer credit restoration services to our customers during these hard economic and financial times.