With credit market volatility in recent times, finding a lending partner on good terms has been quite challenging. A great credit score is the first thing the lender looks for before sanctioning loans. Paying a loan EMI on time helps maintain a good credit score and, in turn, get competitive loan interest rates in the future.
We can check our CIBIL score from any leading credit score-providing website. Various terms are mentioned in the credit report; a DPD or Days Past Due is one such important term.
So, let’s see what DPD in CIBIL means and why it is so important.
DPD Meaning in Banking & Cibil
A DPD in our cibil report indicates whether we have consistently paid the EMI. Moreover, it also shows how many EMIs we have missed and by how many days. So, overall, a DPD in our credit report indicates how serious we are in making our loan repayment.
A separate DPD is generated for each borrowing from the market. So, if we default on a loan, even by a single instalment, the DPD will show on the credit report for the next three years.
Also read – What Is the Difference between Experian and CIBIL?
How is DPD calculated?
DPD, or Days Past Due, is a measure of how late a payment is made compared to its actual due date. It is calculated by counting the number of calendar days between the due date and the payment date. For instance, if your Credit Card bill is due on the 15th and you pay on the 17th, the DPD is 2. If you pay on the 20th, the DPD is 5. Any payment made after the due date, even if just one day late, contributes to the DPD.
The DPD is included in the monthly CIBIL report, reflecting payments for all your loans and Credit Cards. A high DPD suggests poor payment discipline and adversely affects your credit score. Exceeding 30-60 days of DPD can significantly damage your score, ranging from a drop of 50-300 points or more, depending on the severity of the delay, and might even be considered a default.
Significance of DPD:
As told earlier, a DPD table in the credit report helps us understand how disciplined we have been in paying our loan. The DPD table contains our credit repayment history for the last 36 months.
Before handing out any loan, the banks and NBFCs check the DPD table of credit reports to know if we have missed any payment. Typically, banks look for a ‘0’ value in the DPD table. It shows we have been responsible borrowers and possess a low risk.
Because of the DPD table in the credit score, even occasionally missing a payment impacts our credit score negatively and may impede our chance of getting loans at competitive interest rates. However, some lenders may ignore the occasional missing payment in DPD while processing a loan.
How to Read a DPD:
DPD in CIBIL credit report is usually displayed as in the table below.
| DPD Value | 000 | XXX | 30 |
| Month | 9/22 | 10/22 | 11/22 |
Each of these terms has specific relevance.
- 000: It means we paid the EMI of the respective month on time, and there is no payment due for that month.
- XXX: It means the lender hasn’t sent the credit report for that month to the CIBIL, or the lender hasn’t maintained the data.
- 30/60/90: A number like this in the credit report means the borrower has missed the EMIs for that duration.
When DPD Gets Updated in the Credit Report:
While the DPD shows a record of 36 months, it gets updated every time a lender sends data to the credit bureau. However, it is important to note that your credit score might remain the same while the data is submitted every month. It’s because the credit score is measured on various factors.
For example, if we miss a payment by 30 days, the bureau updates the DPD for that month by 30 in the credit report. Similarly, if we fail to make the payment even after one month, in the next month’s report, the DPD will show ’60’.
Experts recommend not missing the payment for more than 3 months, as it may severely damage our creditworthiness.
How to Tackle the Errors in DPD:
Sometimes inadvertent errors creep in — like, we have made a payment, but the DPP shows a missed payment on certain days. We can rectify the mistake by reporting it to the credit bureau.
For this, we need to raise a complaint with the CIBIL, following which the CIBIL will request verification from the respective lender. After this, the CIBIL will add an ‘under dispute’ tag to the credit account.
Once the CIBIL gets an updated report from the lender, it will update the data and remove the ‘under dispute’ tag from the account.
The CIBIL will also send an updated credit report after this.
How to Find DPD in the Credit Report:
We can find DPD in each credit report in the payment history section. For example, if we have four loans against our credit account, the DPD will mention each loan’s 36 months of repayment history separately.
Must read – Tips On Increasing Your CIBIL Score By Using Your Credit Card
Other DPD Values:
Depending on the lender, different types of DPD values may be reported in the credit report. As per the RBI classifications, these values are STD, SUB, DBT, and LSS. Let’s see each of them separately.
- STD: It stands for Standard Payment, meaning we have successfully made the payment within 90 days.
- NPA: It stands for Non-Performing Assets. Suppose we fail to pay within 90 days of the due date. Once the 90-day cut-off period passes, the loan is categorized as the NPA.
- SUB: It stands for sub-standard payment. The payments which haven’t been honoured in the previous 12 months are classified under this category. The lenders assume the borrower may honour the payment promise and will make a repayment shortly. However, the banks may not provide another loan based on the previous credit activity and treat the borrower as a risky proposition.
- DBT: This denotes “doubtful.” Once the borrowed loan hasn’t been paid for more than 12 months, the banks classify these loans under DBT. However, the banks feel the borrower will start paying EMIs soon. On the downside, the banks will not lend any more money to this type of borrower.
- LSS: This stands for “loss.” Once the loan gets into this category, the banks lose all hopes of repayment. Once a credit account gets into this category, almost all lenders reject the loan application.
Conclusion:
A DPD is quite an important feature in the credit report. Besides the borrowers’ creditworthiness, it also helps in accessing the borrower’s credit behaviour. With a zero DPP and high credit score, we can quickly get a loan at any time. So, check your eligibility for a business loan here.