Your credit report is a very important financial document that lenders use to figure out if they should give you credit. It contains a wealth of information about your credit history, including your payment history, credit utilisation, and account balances. One key metric that lenders use to assess your credit risk is your Days Past Due (DPD) status.
In this blog, we will explore what DPD means in your credit report, why it matters, and how you can improve it.
What is Days Past Due (DPD)?
Days Past Due (DPD) is a banking term used to indicate the number of days that have elapsed since the due date of a particular credit account. It is a key metric that lenders use to figure out if someone is creditworthy and how much credit risk they pose. A high DPD means that the borrower has been late with payments in the past, which can hurt their credit score and make it harder for them to get credit in the future. DPD is the number of days that have elapsed since the due date of a particular credit account.
For instance, if you have an EMI with a monthly payment due date of the 15th every month and you make the payment on the 25th, your DPD would be 10.
What role does Days Past Due have in your credit report?
The role that Days Past Due (DPD) plays in your credit report is a significant one. Essentially, DPD provides lenders with an indication of your payment history, specifically how often you repay the credit you have taken on time. Lenders use this information to figure out how reliable you are as a borrower, which helps them decide whether or not to give you a loan.
If you have accounts that are past due, it could negatively impact your credit score, making it more difficult to get credit in the future. Lenders may also see you as a high-risk borrower, and this could result in higher interest rates or less favourable lending terms.
When evaluating your credit report, lenders usually pay close attention to accounts that are past due by more than 30 days. If you have these kinds of accounts, lenders may be less likely to give you a loan or ask for more information before making a decision.
Which keywords in your credit report indicate DPD levels?
Credit reports may have several keywords that can be used to figure out a person’s Days Past Due level. The following are some commonly used keywords that indicate DPD levels:
● STD
This stands for Standard Payment, indicating that a payment has been made within 90 days.
● NPA
This stands for Non-Performing Assets, indicating that payments are past due by 90 days.
● SUB
This stands for Substandard, indicating that payments have not been made for up to 12 months.
● DBT
This stands for Doubtful, indicating that payments have not been made for more than 12 months.
● LSS
This stands for Loss, indicating that there is no hope of repayment from an individual.
Banks consider applicants with a DBT or LSS tag to be risky, and their chances of getting loans approved are typically lower due to their low CIBIL score.
| DPD Value | 000 | XXX | 30 | 60 |
| Month | 1-23 | 2-23 | 3-23 | 4-23 |
- 000: It signifies that you have paid all your EMIs for the month on time and do not have any outstanding dues for the month. This is the safest value you could have on your credit report.
- XXX: When the lender does not provide any data regarding repayment to the credit bureau, this value is shown in your report. The applicant is considered safe in this case, and it does not have any impact on the candidate’s profile.
- 30, 60, 90: These values on a DPD table in the credit report indicate the number of days passed after the payment due date of the loan EMI/credit card bill. This has an impact on your credit score and leads you to borrow at expensive rates.
What is a good Days Past Due?
A good Days Past Due is relative to the type of credit account and payment terms associated with it. Typically, for a credit card account, a DPD of less than 30 days is considered good, while for a home loan, a DPD of less than 90 days is considered good.
It is important to pay your credit bills on time if you want to keep a good DPD and raise your credit score.
How can you improve your DPD?
Improving your Days Past Due is crucial to maintaining a healthy credit score. Check out the following steps that you can take to improve your DPD:
● Make timely payments
The most important step to improving your DPD is to make sure you make all your loan repayments within 90 days of the due date. You may set reminders on your smartphone or calendar to guarantee that payments are made on time.
● Reduce your credit utilisation ratio
Your credit utilisation ratio is the percentage of your credit limit that you are using. You can either pay off your debts or raise your credit limit to keep your credit utilisation ratio below 30%.
● Examine your credit report for inaccuracies
Errors in your credit report or DPD payments can impact your credit score. If you spot any errors, dispute them with the credit bureau to correct them.
● Maintain a healthy credit history
A good credit history is crucial to improving your DPD and credit score. To build a good credit history, pay back all of your loans on time and keep your credit usage low.
Conclusion
Understanding Days Past Due is crucial when it comes to assessing an individual’s creditworthiness. A good DPD is a reflection of timely repayments and a low credit utilisation ratio, which are critical factors for maintaining a healthy credit score. By following the steps mentioned in this article, you can improve your DPD and boost your chances of securing loans at a lower interest rate.
If you’re in the process of buying a home and need assistance with your down payment, HomeCapital offers interest-free credit up to 50% of the home down payment amount. With flexible repayment options and no prepayment charges, HomeCapital can help make your dream of homeownership a reality. Don’t hesitate to check out their website for more information and to apply.