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Paying your bills on time not only keeps your debt in control, but it also
keeps your interest rates in check. Were you aware that all of the credit
card companies that you have an account with have the ability to check over
your credit file to make sure that you are paying your bills on time? If you
seem to be late on some payments, don't be surprised to see your interest
rates change as a result. Some credit card companies have started to alter
interest rates on cardholders who have begun showing signs of risk. On the
other hand, if your credit report is immaculate, don't be surprised to see
your credit limit increased.
Some cardholder agreements authorize credit card companies to view your
credit report and check for any behavior that could affect your credit
status with them. If they see a pattern of late payments or other risky
payment behavior, they may take precautions to protect themselves--thus
raising your interest rates.
When these card companies look into customers' credit files, they look at
the risk factors. If someone has been delinquent with another creditor, then
that may be an indication that s/he may be delinquent with another creditor.
So, they adjust their credit decisions accordingly.
There are a number of credit card companies out there that have implemented
policies such that if a payment is missed or not received by the creditor
within 30 days of the due date, then the interest rate will increase.
Credit Evaluations Happening More Often
Consumers accept the fact that having a credit card brings both benefits and
costs, typically in the form of convenience and interest. So when consumers
obtain credit, they accept that they will be "paying" for the convenience of
using a credit card. But it often comes as a surprise when the "payment," or
interest rate, increases--particularly if the consumers' payments have been
made on time.
However, in the fine print of credit card statements, the card companies
specifically tell consumers that they have the right to raise the rates
anytime that they feel the account is becoming a risk. If creditors are
seeing a rise in balances as well as late payments, the risk becomes greater
for all creditors that you have accounts with.
Ways to Keep Your Rates in Check
Keep a list of credit card accounts, due dates, balances and credit limits.
If a credit card due date falls at a time of the month when cash is tight,
call the issuer and have the due date changed.
Get in the habit of paying credit bills as soon as they arrive.
Monitor card accounts carefully.
Check your credit report at least once a year to ensure the information is
accurate.
Rest assured that, when an existing creditor, with whom you have an account,
accesses your credit file in the course of performing a normal periodic
review, your creditworthiness is not affected. These types of inquiries are
not included in reports provided to credit grantors.