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Alarming Credit-Card Tricks #1 - Applying for a Mortgage? We'll Bump Up Your APR





It is becoming a scary movie. Do nothing wrong and apply for a mortgage, and suddenly you will be forced to pay a higher rate. How could this be fair???

From SmartMoney:

Creditors often increase your interest rate when they notice negative activity — say, a late payment or an over-the-limit fee — on any of the accounts that show up on your credit report. This practice, known as "universal default," has become increasingly prevalent during the past few years. Today, 45% of credit-card providers engage in this practice, according to Consumer Action, compared with 39% in 2003.

But while universal default has existed for some time, Consumer Action's 2005 survey found an alarming new trend: You no longer need to do something wrong to be hit with a universal default rate.

According to the survey, 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. Even things like getting a new credit card (33%) and an inquiry related to a car loan or mortgage (24%) can trigger universal default.

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