Universal Default

When credit card holders are late in their payments for bills that are not related to their credit card debt, these late transactions will often appear on their credit reports.

When a credit card company learns about late payments occurring in other areas of their credit card holder’s life, they will use the universal default formula to raise the credit card rates to include extra money to cover the assumed risk factors.

The universal default formula can be used on people who have never missed a payment with their credit card company. The CARD Act placed restrictions on universal default practices.

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