credit report - Universal Default - Tips On Avoiding The Trap

You've probably never heard of it, but it's in your credit card agreement contract. We all read that barely visible lengthy finely printed jargon, don't we? "Universal default" refers to the credit card rule that allows a credit card issuer to raise your interest rate, at any point in time, if they believe that you are a credit risk. For example, if you pay late on credit card A, in addition to credit card A raising your interest rates, credit card B and C can also raise your interest rates. So how does the credit card company know that you were late on paying the bill for credit card A? Your credit report tells all. Banks actively monitor your credit score to see, if your score has declined due to late payments, too many lines of credit, bounced checks, inquiries, etc. It is estimated that approximately 44% of all credit card issuing banks have a universal default clause in their credit card agreement. This is an increase of 5% since 2003. The universal default clause has been in existence over the years but the rate at which banks are enforcing the rule has increased, in an effort to increase revenues. In addition, the universal default penalty has risen sharply and can land you an interest rate as high as 25%. The scary fact is that you could buy a refrigerator at a 9% interest rate, only to find yourself paying an interest rate of 24.99% for the same purchase. Here are some tips on avoiding the universal default penalty: Understand your credit card contract. You don't have to spend hours examining every finely printed word, but make it a point to scan the credit card agreement and rules, looking for special clauses such as "universal default". You can also contact your credit card company, if you do not understand any of the agreement terms. Monitor your credit report on a frequent basis. You are entitled to three free credit reports per year according to the Fair Credit Reporting Act (FCRA) - take advantage of them. Fix credit report errors. If you find anything on your credit report that raises "red flags" - take corrective action and fix them right away. Your credit file may reveal accounts that you did not open and other identity theft related issues. You will want to fix these errors so that they do not affect your FICO score. Pay all your bills on time. Online banking is a great way to ensure that your bills are paid like clockwork. The author is the owner of the free information-rich website http://www.poorcreditgenie.com. The website offers free debt management credit counseling advice and information. Learn how to improve your FICO score and eliminate credit card debt. The site also features numerous articles and news stories on credit reports, credit cards and bankruptcy. Article Source:http://EzineArticles.com/?expert=Delia_Galley credit report - Free Annual Credit Report From All 3 Reporting Agencies Anyone who wishes to apply for a credit card, mortgage loan, car loan or debt consolidation loan needs to be familiar with his/her credit report and the information contained inside. So, just what is included in a credit report? The answer is an entire listing of an individual's payment history for the past 7 years, current debt load and any public record information, such as judgements, bankruptcy and/or foreclosures. These factors, along with a debt to income ratio, combine to create a FICO score. This is a number that potential lenders use to calculate the interest rate that will be paid during the life of the loan, which is usually determined by any determinable credit risk. Most consumers are surprised to learn that they are permitted to request a free copy of their credit report, every 12 months, from each of the three major credit reporting agencies. These include Experian, TransUnion and Equifax. These are the three agencies that respond to credit report requests from banks and other potential lenders. They supply the credit report, which is used to determine whether or not a loan is approved, the amount of any loan granted and an interest rate. While the credit reporting agencies are not involved in the actual credit decision, they are the ones who provide the information that leads to that decision. These days, many businesses promise to provide a free credit report, but there is almost always a subscription requirement or paid service that must be honored before the individual can receive their free credit report. One website, however, is much different. Once every 12 months, consumers may visit http://www.AnnualCreditReport.com and request instant online access to their free credit report from each of the three previously mentioned credit reporting agencies. Upon viewing each credit report, which may be slightly different from each of the reporting agencies, individuals will be able to review every entry and confirm their accuracy. If anything is determined to be incorrect, including an account balance, status or payment history, the consumer has a right to dispute that information with the credit reporting agency directly. At the time that a dispute is lodged, the agency will launch an investigation to determine whether or not the entry needs correcting. At any time during the year, if an applicant is denied credit, he/she has a right to receive a free copy of the credit report from the agency who supplied the information to the denying lender. The lender must supply the name, address and telephone number of the credit reporting agency that supplied the applicant's credit report. Within 60 days of the notice of denial for credit, the applicant may request a free copy of his/her credit report. A final consideration recommended to all consumers is that, in order to prevent identity theft or any type of fraud, a credit report should be monitored every six months.