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'Universal default' rules explained

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Some card companies review your credit report monthly, some quarterly and some yearly and some never do. Customers who have made late payments in the past get reviewed more often than those who always pay on time.

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"ICFE receives calls at an increasing rate everyday from distressed consumers complaining the interest rates on their credit cards have shot up -- without explanation or advance notice," says Richard.

It will also lower your all-important credit score.

Preventing this from happening is relatively simple, but fixing it so it won't happen again is another story.

Don't let it happen to you
You can head off any problems simply by meeting all your monthly obligations not just on time, but at least a week or more ahead of the payment due date. Some counselors advise getting into the habit of paying bills when you receive them.

Fixing the problem to prevent it from recurring is not so easy. Once a negative hits a credit report, the damage is done.

To get it removed, a consumer must convince the creditor the problems lie elsewhere and that the consumer is not at fault for a payment being recorded as late. Usually consumers lose this argument, unless they send their payments certified mail and can actually track the date of receipt.

"Without any sort of proof your payments were delivered on time to the creditor, consumers will be paying higher interest rates and other fees, perhaps for years to come," cautions Richard, who advises consumers experiencing difficulty to seek help from ICFE online.

Detweiler offers several tips on how you can avoid disaster:

How you can avoid disaster:
If you have a fairly large credit balance, make sure it's at a low fixed rate -- with no universal default risk tucked away in the fine print.
Monitor your accounts carefully and examine each bill when it arrives to check its due date.
If you decide to dispute a bill, act promptly to work it out with the lender. Don't wait until your account is sent to a collection agency.
Keep accurate lists of your credit cards, balances, limits, interest rate and payment due dates.
Contact the card company and ask to have your due date changed so that it falls at a convenient time of the month for your lifestyle.
Consider paying bills when they arrive instead of when they are due.
Consider paying your bills automatically and electronically each month, either by computer or through a banking arrangement.

That's why you should always shop for your credit the way you shop for any major purchase:

Shop for your credit :
Research all your options.
Weigh the costs and benefits.
Read all of the fine print. Never forget that when you sign up for a credit card, you are entering a legally binding agreement.'s corrections policy -- Updated: Jan. 25, 2007
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