What is Days Past Due (DPD) in the CIBIL report?

An individual's CIBIL report provides details about their credit history and credit score. Banks and financial institutions use it to evaluate loan applications. Days Past Due or DPD is an important metric in CIBIL reports.

What is DPD?
 

DPD refers to the number of days a loan EMI or Credit Card payment is overdue. It indicates if there have been any defaults or delays in payments. Lower DPDs indicate on-time payments, which is preferred. Credit scores and loan eligibility can be adversely affected by a high DPD.

How is DPD calculated?

DPD is calculated based on the actual due date of an EMI or Credit Card bill payment vs the date the payment is made. For example:

In case your Credit Card bill payment is due on the 15th of every month, and you pay on the 17th, the DPD will be 2. If you pay the bill on the 20th, the DPD will be 5. Furthermore, if you miss a payment in a given month, the DPD will be 15 or higher based on when you make the next payment.

The DPD is counted based on the number of calendar days, not business days between the due date and payment date. Any payment made after the due date, even if it is just one day late, is counted towards the DPD. The DPD is reported monthly in the CIBIL report based on the payments made towards all your loans and Credit Cards.

A high DPD signifies poor payment discipline and impacts your credit score negatively. If the DPD exceeds 30-60 days, it can damage your score significantly as it will be considered a default. Your credit score can drop by 50-300 points or even more depending upon the severity of the default.

How to improve your DPD?
 

You can take the following steps to lower your DPD and improve your credit score:

1. Pay all your bills on time
 

The most critical step is to pay all your Credit Card bills, EMIs, and loan payments before or on the due dates. This will ensure your DPD remains 0 and does not contribute negatively to your credit score.

2. Set payment reminders
 

If you have trouble keeping track of due dates, set payment reminders through SMS, email or apps to ensure no bill remains unpaid. Make payments at least 2-3 days before the due date.

3. Budget and prioritise
 

Make a budget to understand your income and expenditures. Prioritise high-value loans and Credit Cards before other discretionary expenses. This approach will help avoid missing any payments.

4. Check statements regularly
 

Review your Credit Card and loan statements regularly to check for errors or fraudulent transactions. Report the same to the bank immediately. This will prevent your genuine payments from getting delayed or missed.

You may also contact your bank if you are confused about your DPD. Banks like IDFC FIRST Bank have a helpful customer care service that can help you sort things out.

What is the impact of a high DPD on my loan eligibility?
 

Lenders may approve your loan application but charge a higher interest rate to compensate for the higher risk. The interest rate can be 50-300 basis points or even higher than normal. This increases your repayment burden. Lenders may sanction your loan but for a lower amount than you requested. They may approve a smaller loan to limit their risk exposure given your poor repayment record. You may not get the funding you need to meet your needs.

Lenders may also ask for additional security or collateral against the loan, such as gold, fixed deposits, shares, etc. This is to ensure there is enough backup in case you default on the new loan. Not all borrowers may be able to provide additional collateral.

Keep a good payment record over a long period of time in order to build a good CIBIL report and access affordable credit options when you need them.
 

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.