San Diego, CA. - Universal default, a dangerous adverse
action against a borrower, is still largely an unknown,
inconvenient fact among consumers. Universal default is
a clause included within most credit card offers and
agreements which says if you are late with any other
creditor; you are considered late with them all. The
ICFE was the first nonprofit group to speak out against
universal default and its negative affects on consumer
credit scores in October 2003.
The San Diego based, nonprofit, Institute of Consumer
Financial Education (ICFE) is pleased to make available
on-line, a free 26 slide PowerPoint presentation,
designed for financial planners, credit and debt
counselors to explain universal default and what happens
when a creditor invokes the clause against a borrower to
their clients. .
It comes into play when a consumer, who otherwise has
excellent credit (and also a high credit score),
suddenly has a negative item appear on their credit
report. When negatives begin to appear on a report, the
universal default clause is often invoked.
The ICFE s free online PowerPoint Show explains how
universal default works, show examples of its wording in
credit card agreements and provides some interesting
facts and figures about the institutions which apply it
to their delinquent accounts. For instance, more than
one-third of major credit card issuers now say they act
on these clauses regularly." A recent survey found that
a staggering 44 percent of credit card issuers said they
apply the rule to customers, even if they had no late
payments on their own card.
The result of the so-called universal default clause is
the low interest rates enjoyed at the outset of a credit
relationship with a lender, will soar and, in more than
a few cases, they may double or triple. Creditors and
lenders are now more closely monitoring credit reports
of their current clients for signs of trouble,
especially with other lenders. 43% of creditors who
practice universal default would enforce it if they
deemed that a cardholder had too much overall debt and
33% would do it if they thought the consumer had too
much available credit..
Missing or being later on a payment, even to the phone
company, a book or music club can be very costly if it
makes it on to your credit report. It is now much more
than a $30 or $40 late payment fee, because not only
does it trigger higher fees and interest charges, it
will also lower credit scores.
For more information about the ICFE s free online
presentation, please visit the ICFE web site at:
www.icfe.info or you contact: Paul Richard RFC at 619
239 1401.