Lenders and financial institutions check your CIBIL score or credit score to validate your repayment possibility and decide whether or not to approve your loan or credit card application. CIBIL score, one of the deciding criteria by lenders, is a 3-digit number that considers various factors, with repayment history as one of the major factors. But do you know that your credit report has a significant parameter named Days Past Due (DPD) that gives a detailed picture of your repayment behaviour in the past 36 months?

Let’s dive deeper into the details of DPD and its significance.

What is DPD in CIBIL Report?

When we talk about repayment behaviour, it is not just how many times you promptly paid the bill or how many times you missed or delayed the payments. It also considers how many days past the due date the payment was made. A payment made just 5 days past the due date should have more weightage than a payment that is late by 10 days, right? DPD is the parameter that showcases the number of days you exceeded the due date for repaying your loan EMIs or credit card bills. It is a crucial factor to weigh your responsibility towards paying back your credit bills.

This DPD report, which is present in the “Payment History” section of your CIBIL report, shows the payment timeline of the past 36 months of each of the credit accounts that are active and recently closed. Thus if you have 3 credit accounts in the past 36 months timespan, then your DPD report will have 3 sections, one for each account and a score corresponding to each month's repayment behaviour for all 36 months. Each month, the DPD report is updated, and hence, the older months will be removed from the timesheet, and the latest month will be added.

Understanding the Formula of Days Past Due (DPD)

For each account, you would get the last 36 DPD scores. Lenders pay attention to these DPD scores to get a clear idea of how good you are at repaying the bills on time.

Let’s understand how this score is calculated for each month. If a payment is due on a certain date and you made the payment X days after the due date, your DPD value for that month would be X and that gets updated every month.

Say, if you have missed the payment by 15 days, then the DPD score for that month will be 15. The DPD value for that month will be reevaluated and updated and keep on increasing every month until you fully repay the amount. The DPD value for the paid bills will remain constant. The lower the DPD values, the better your creditworthiness is and even a one-day delay will be reflected in your DBP report. A default of about 30 to 60 days will pull your score down by 50-300 points.

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DPD Terms and Their Significance

1. XXX: A failure on the part of the bank or lender to update your data will be marked as XXX. Though this is not a risky factor, repeated XXX in your DPD report could lead to uncertainties in your credit assessment. Hence, check your credit report frequently and report to the corresponding authorities immediately if you detect anything wrong in your report to avoid such mishaps.

2. 000: This is a value you get if you have paid the bills on time and there are no outstanding payments left. It is the safest value you can get. It shows that you are financially responsible, and lenders will be ready to approve your loan or credit card application.

3. Any numerical Value: The number of days past the due date will be represented in numerical values. Lower values indicate that even though you missed payments, you are responsibily for taking steps to repay the amount as early as possible. Lenders make a lending decision on your credit application based on the value of DPD and the frequency of occurrence.

4. STD: DPD value that ranges from 1 to 90 are considered in the standard (STD) category. It signifies that dues are pending for less than 90 days. It shows that even though you are not an ideal borrower, you can be considered a low-risk borrower. Hence, lenders may evaluate other factors to approve credit products or may approve lesser amounts based on the frequency of delays and the value of DPD. Even single missed or delayed payments will be considered in evaluating your creditworthiness.

Accounts with payment delays of more than 90 days are categorised as NPA or Non-Performing Assets and it creates a serious negative impact on your credit application approval process. NPA accounts are categorised into 3 as follows.

5. SUB: The sub-standard (SUB) corresponds to delayed payment of more than 90 days and less than 12 months.

6. DBT: If an account has remained in the SUB category for a duration of 12 months, then it will be moved to the DBT or doubt category.

7. LSS: When lenders consider an account with payment due that is no longer recoverable, then it is considered as a loss (LSS).

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Consequences of DPD

Higher DPD values negatively impact your CIBIL credit score and give a red signal to the lenders to be cautious in approving loan applications. So, you may face a few challenges while getting your loan or credit card application approved.

1. Your bank or lender may deny loan approval or ask for collateral or other security to approve the loan.

2. Even if they approve the loan, they may levy higher interest rates or approve a lower amount to compensate for the risk involved.

3. You may have to face loan terms such as higher down payments or lesser tenure.

4. If you have consistent good DPD values and a good CIBIL credit score, you can negotiate with the lender for better deals regarding the credit product.

Read More:: Is 772 a Good CIBIL Score?

Tips to Maintain a Healthy DPD Value

DPD values are consequences of your repayment behaviour. The DPD value remains on your credit report for a span of 36 months and will negatively affect your CIBIL credit score for a few years. You can take a few steps to make sure you have good DPD values and, thereby healthy credit score.

1. While opting for new loans or credit cards, thoroughly analyse your current income and expenditure and decide whether you are financially stable enough to pay the EMIs or credit bills promptly.

2. Make sure to have an emergency cash reserve to ensure that you can pay the bills and EMIs even in months when you have an additional financial burden.

3. Reserve the amount for the credit bills a month ahead to avoid a shortage of the amount for paying the bills. Make a note that partial payments also increase your DPD value and affect your financial health.

4. It’s human to forget things, especially when we are under stress or at times of heavy workloads. So, automate all credit bill payments to ensure that you never forget to make a payment.

5. Set reminders to make sure that you have made payments.

6. Prioritising high-value payments is a good strategy when you fall short of money to pay the credit bills. Delayed or partial payments have other consequences like penalties and interest, which will further increase your financial burden in the coming months. So, if you have multiple active credit accounts, give more priority to paying credit bills that are of higher value.

7. If you find it difficult to make the credit bill payments, talk to the lenders. Lenders may revise your payment plans. Sometimes, lenders may provide you with some solutions that will give you temporary relief.

8. Check your CIBIL credit report frequently to ensure that all payments are correctly updated. If you find any error or inaccuracies in the payment history take immediate steps. File a dispute with the credit bureau and correct the details as early as possible. The credit bureau will cross-verify with the lender about your payment details and, after verification, will remove the late payment details from your record.

Due to unavoidable reasons, if your DPD value has shot up to a higher value, don't worry. Your month-wise DPD value will be showcased in the credit report for 36 months. Hence, your repayment history will improve after that time period. However, the impact of the missed or delayed payment will have an impact on the credit score value for a few years.

Read More:: Is 776 a Good CIBIL Score?

In Conclusion

Financial emergencies can occur at any time, and we should always be ready to face them. Loans or credit products are great options to effortlessly handle financial emergencies. When we apply for a loan or a credit card, lenders and financial institutions look at our credit score to judge our creditworthiness and finalise their lending decisions. The credit score calculation takes into account various factors among which the repayment history is the main factor. DPD, or Days Past Due, is a sequence of numerical values that are given to the last 36 month's repayment behaviour and is calculated as the number of days past the due date the payment is done. Take simple steps to ensure you maintain a healthy DPD value and CIBIL credit score.

FAQs

Do partial payments have an effect on the DPD value?

Yes. Partial payments are as damaging as missed payments. Your DPD value will be increasing until you make the full payment. So, make it a rule to analyse your financial health before opting for new credit products and reserve the amount in advance for your next credit bill payment.

Why do I have XXX as a DPD value in my CIBIL report?

XXX in the credit report specifies that your lender bank or financial institution has not reported or updated your payment details. Though this is not your fault and has no negative impact on your credit score, multiple XXX values could lead to uncertainties in your credit assessment.

What happens when I report an error in my payment history?

When you file a dispute with the credit bureau regarding your payment details, they will request a verification from the corresponding lender, and the payment under dispute will be tagged as "Under Dispute". Once the verification is done, the credit bureau will update accordingly and remove the "Under Dispute" tag.

Do single payment delays affect my CIBIL credit score?

Yes. Every single delayed payment will be reported in your credit report. Note that even a single-day delay is marked in your report and will have a negative impact on your credit score. Timely full payments are the best way to have healthy DPD values and a CIBIL credit score.

Is it possible to edit my DPD value?

You cannot edit any DPD value. It will stay there in the report for 36 months and then will disappear as new values come in. But if you find a wrong DPD value because of some wrong information about your repayment, then you can file a dispute with the corresponding credit bureau. They will investigate with the lender and will do the needful if they find your claim to be truthful.

Do lenders consider my DPD value for approving smaller amounts of loans?

Yes. Usually, banks and financial institutions check your credit score and DPD values before sanctioning credit products. If you have higher DPD values, then the lenders may decide to reject the loan application. On the other hand, if you have DPDs that are low in value and your loan amount is low, they may approve it to increase the interest rate or reduce the tenure.