▁in , ▁last ▁out ▁FI LO ▁basis . ▁▁ ▁Norm ally ▁the ▁default ▁rate ▁is ▁charged ▁when ▁a ▁customer ▁fails ▁to ▁make ▁a ▁payment ▁on ▁a ▁particular ▁l ender ' s ▁credit ▁card , ▁but ▁with ▁universal ▁default , ▁the ▁l ender ▁will ▁charge ▁the ▁rate ▁if ▁the ▁customer ▁defaults ▁elsewhere . ▁ ▁Crit ic isms ▁The ▁concept ▁of ▁universal ▁default ▁is ▁critic ized ▁for ▁many ▁reasons . ▁▁ ▁Those ▁who ▁disag ree ▁with ▁the ▁entire ▁concept ▁of ▁risk - based ▁pr icing ▁disag ree ▁necessarily ▁with ▁an ▁application ▁of ▁that ▁concept . ▁The ▁concept ▁of ▁one ▁l ender ▁charg ing ▁a ▁higher ▁price ▁when ▁their ▁customer ▁defaults ▁with ▁another ▁l ender ▁has ▁been ▁compared ▁to ▁having ▁a ▁cart el , ▁or ▁price ▁fixing ▁structure . ▁It ▁is ▁thought ▁that ▁when ▁a ▁customer ▁in ▁dire ▁financial ▁stra its ▁defaults ▁with ▁one ▁l ender , ▁the ▁concept ▁of ▁universal ▁default , ▁and ▁the ▁subsequent ▁interest ▁rate ▁increases , ▁can ▁create ▁a ▁v icious ▁cycle ▁which ▁can ▁cause ▁the ▁customer ▁to ▁default ▁everywhere . ▁There ▁is ▁the ▁possibility ▁that ▁the ▁credit ▁product ▁which ▁was ▁shown ▁as ▁being ▁in ▁default ▁in ▁the ▁first ▁place ▁was ▁in ▁default ▁due ▁to ▁fra ud ▁or ▁institution al ▁error . ▁If ▁this ▁is ▁the ▁case , ▁while ▁the ▁customer ▁has ▁full ▁legal ▁rights ▁to ▁have ▁the ▁error ▁corrected ▁on ▁his ▁credit ▁report , ▁any ▁l ender ▁who ▁instit uted ▁the ▁universal ▁default ▁rate ▁is ▁under ▁no ▁oblig ation ▁to ▁return ▁to ▁the ▁normal ▁rate . ▁The ▁increased ▁rate ▁is ▁seen