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ArticlesLittle known facts about your creditPay late and they'll change your rateThe fine print of many credit card agreements states that if you make a payment 30 days late they reserve the right to change your interest rate. This is known as the risk based pricing. They want to keep you as a customer but minimize the risk of keeping you around. Another much scarier aspect of this situation is that many credit card companies will conduct periodic reviews of your credit report. If they find that your were late paying totally unrelated credit accounts or found other negative marks on your credit report they will often raise your interest rate on their account. This is a very controversial practice but legal since you signed an agreement when you applied for the card. The Credit Card Bait and Switch We all receive plenty of those pre-approved credit card offers in the mail. They offer us a low rate if we sign up for a new account or transfer a balance from another account. Many people complete the application, get the new card in the mail, and don't realize that the interest rate is higher than what was in the original offer. This bait and switch is done because in the fine print of your application is states something like. "We reserve the right to change our offer if after reviewing your credit report we find something negative about your credit history". Aside from many people not noticing this until their first bill, there is no way for the consumer to know what the credit card company considers to be negative on your credit report. It could be anything, i.e. we don't know if they are baiting and switching all applications or just a few. The Credit to Insurance Connection? Insurance companies will routinely run credit reports on their customers to reset premiums. This is controversial and court cases have challenged are continuing to challenge this practice. Progressive auto insurance was accused of raising a customers premium by 20% after conducting a credit review. The customer had a perfect driving record with no accident or moving violations to justify the increase. The company claimed it was part of a "routine" rate hike, but after filing a lawsuit the customer learned it was due to negative information on her credit report. Unfortunately the Fair Credit Reporting Act (FCRA) states that credit reports can be used for "credit, insurance, and employment purposes". Don't expect the credit to insurance connection to disappear. Beware: Department Store Credit Card with Instant Discount Department stores often instruct their checkout people to offer you and instant discount if you apply for a store credit card on the spot. If you fall for this gimmick is results in a triple whammy to your credit score. Here's what happens. These cards usually start with very low credit limits so your purchase gives you an instant "high ratio of credit balance to credit limit" wack. Next you just logged an inquiry on your credit report which also lowers your score. Third, the credit scoring models look poorly on store charge cards. Don't fall for this one. If you need to charge the purchase put it on your VISA or MasterCard.
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