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DPD in Your CIBIL Report: Full Form, Meaning & Calculation

DPD
Credit scores and credit reports are more crucial than ever for financial transactions today. Before approving a loan, financial institutions assess a borrower's creditworthiness using credit reports. The DPD part of a credit report shows the borrower's payment history and is one of its crucial elements. 
 
In this blog, we will learn about DPD's full form, DPD meaning, significance, and how to calculate DPD in the CIBIL report.
 

What is DPD?


Days Past Due (DPD) refers to the number of days a borrower has failed to make a scheduled EMI on a loan or credit card. It is a measure that lenders use to track the timeliness of your payments. Let’s understand it with an example below.
 
If you have a monthly loan payment due on the 1st of every month and you fail to make the payment by the due date, your DPD will begin to accrue. If you pay by the 10th of the month, your DPD will be ten days.
 
Also Read: How to read credit report
 

Why is DPD significant?

Lenders in India use DPD to assess borrowers' creditworthiness and determine their lending risk. A high DPD indicates a borrower's history of late payments, and they may be more likely to default on their loan. This could result in penalties and increased interest rates if they apply for a loan. That is why it is essential to make timely payments to avoid accruing DPD and to maintain a good credit score.
 

Role of DPD in CIBIL

DPD in CIBIL means the DPD information included in the credit report provided by CIBIL. This section in the report consists of the following information:
 
  • The number of days a payment is overdue.
  • The number of overdue payments.
  • The total outstanding amount.
 
The DPD section is further divided into categories, such as 30 days past due, 60 days past due, and so on, based on the number of days payment is overdue.
 
The DPD in the CIBIL report plays a crucial role in determining a borrower's eligibility for a Personal Loan. We use the DPD information to assess the borrower's creditworthiness and loan repayment ability.
 
Hence, a high DPD score indicates that the borrower has a history of missing payments, which could make it difficult for them to obtain a Personal Loan. On the other hand, a low DPD score indicates that the borrower has a good payment history and is more likely to be approved for a Personal Loan.
 

How to calculate DPD?

Here’s the formula to calculate the DPD in the CIBIL report.
 
DPD = (Number of days past due on the account / Total number of days since the last payment due date) * 100
 
Also Read: Improve credit Score after loan settlement
 

 

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5 Ways to Improve Credit Score with a High DPD


What if you have a high DPD? This implies improving your credit score to secure loans in the future. Let’s look at the ways to improve your credit score with a high DPD:
 

  1. Pay your bills on time

    Ensure you pay all of your bills by the due date. To increase your DPD, all your unpaid balances should be paid at least within 90 days. This is one of the initial actions you can do to ensure your credit score gradually rises.
     

  1. Maintain your credit usage ratio

    This metric shows how much of your available credit you are using. A greater credit utilisation ratio can lower your credit score by giving the impression that you have a lot of financial obligations to meet.
     

  1. Report any problems you see in your credit report

    Your credit report may contain errors that falsely indicate a high DPD. Since a high DPD can harm your credit score, you must report the issue right away.
     

  1. Try to keep credit accounts active

    Keeping your good credit accounts active shows you have good money management skills. Lenders view it as a guarantee that you will repay your debts in the same order in the future.
     

  1. Keep up a positive credit history

    This is something you should constantly strive to achieve. Your credit history can be improved by paying your bills on time, maintaining a decent credit utilisation ratio, limiting the number of loan applications you make, etc.
     

Conclusion

 
DPD is an important factor in your CIBIL report that represents your creditworthiness. It is a metric that counts the number of days you have missed credit payments, and a high DPD shows a lack of fiscal responsibility and discipline. As a result, it may lower your credit score and reduce your ability to get credit in the future. 
 
Keeping your DPD low by paying your bills on time and handling your money well is essential to maintain a good credit score and financial security. It also affects your eligibility for a Personal Loan, as with a lower DPD, we can approve your application quickly.
 
If you are planning to apply for a Personal Loan, consider Hero FinCorp. We have a hassle-free loan application process with competitive interest rates and a flexible repayment tenure of up to 60 months. Apply today and ensure an easy process for a Personal Loan application.
 

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Did You Know

Disbursement

The act of paying out money for any kind of transaction is known as disbursement. From a lending perspective this usual implies the transfer of the loan amount to the borrower. It may cover paying to operate a business, dividend payments, cash outflow etc. So if disbursements are more than revenues, then cash flow of an entity is negative, and may indicate possible insolvency.

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