The process of a lender resetting the interest rate on a loan or credit card to the default rate. The universal default is explained in the terms and conditions provided by the lender to the borrower. It also explains what actions will cause the universal default to take effect. Most lender resort to the universal default when a borrower makes a late payment or goes over the credit line supplied. However, in some cases the lender may resort to the universal default based on the status of credit markets.