Let’s look at an example:

You have 2 credit cards, one for Bob’s Bif Burgers restaurant, and one for Jake’s Jiant Jambalaya (yes, I am hungry).

You have been making regular payments on both cards, but one month your Bob’s payment gets lost in the mail.

Jake checks your credit report, and sees that you made a payment late.  So, Jake decides that your interest rate should be 29% instead of the 14% he had been charging you.

Universal default also covers making a late payment to a credit card company and having that company raise the rate.

For many cards that are considered ‘sub-prime’ (in other words they were easy to get), a single late payment would result in a rate increase after a very short grace period of a few days.  They did this to protect themselves by taking in larger profits in case you were going to default on the card.  However, what this really did was take someone who was in trouble and make matters worse for them.  The net result was a much longer life on credit card debt.

The new bill stops that.  Now, a debt has to be at least 60 days late before a company can raise your rates.  This is a big boon to the consumer, and will cover simple mistakes.  However, I would expect those rate increases to be bigger now, as the credit companies will be protecting against default more agressively.

Score on for the consumer, but this this is a big blow to reputable credit companies.

In addition to putting limits on interest rate change policies and the fees that can be imposed for credit mistakes, the bill also seeks to place limits on who can get a card based on age.

Like any change to an existing business practice, this will have big implications for both the credit industry and the consumers of credit.  I will be analyzing the impact of this bill over the next several days.

In the mean time, take a look at this:

Senate OKs bill to reign in credit industry

One thing I can tell you is this:  It isn’t going to last.  Either you will cure the problem, or you will eventually just run out of credit problems.  Either way, the problem will get solved.

Personally, I go for curing things.  I don’t like to have someone else make decisions for me, so I am going to make the decisions myself.  In the case of credit, I choose to fix it.

If you want to know how to protect your credit scores, get ‘The Top 10 Ways You Can Wreck Your Credit’.

Mike Shanahan, the former coach of the Denver Broncos, said this when he was fired from his coaching position:

“Tough times don’t last.  Tough people do.”

Think about that.  Your situation will change.  You WILL be able to move forward again.  No matter what caused your credit problems, you will get out of it somehow.

So, what is the most important thing you can do when fixing your credit?  That is simple.

Start.

Do something.  Get a credit report.  Look at the problems on it.  And then decide what you want to do to fix the problems.

I’ll even help you out.  You can learn how to read a credit report for free by reading this paper:

How To Read A Credit Report

If you don’t want to work on your credit, but you are late on payments, call your creditors and get some help.  They may be able to reduce payments for a while, or cut back on some interest.

Whatever you do, though, make sure you start.  Right now.  Today.  Don’t wait any more.  The longer you put it off, the tougher it will get for you.

Good luck with your credit!

Check it out here:

http://www.ftc.gov/bcp/conline/pubs/credit/repair.shtm

To get a copy of my FREE e-Book ‘The Top 10 Questions A Debt Collector Might Ask You’, just click the link. You will be taken to a page where you can get more information about downloading the e-book. This book tells you what you might hear during a call from a collector, how they use the information they get from you, and how you can protect yourself by not divulging too much.