The current market volatility and financial instability make finding a reliable source of finance 0difficult. Getting immediate funding is possible in a number of ways, but not all are as convenient and affordable as bank loans.
At present, most financial institutions are hesitant to make unsecured loans. A few irresponsible actions in the past have put them on high alert. Their policy is to thoroughly investigate a debtor’s financial situation before lending them money in order to avoid this. As part of this process, lenders often look at credit quality first.
Your credit score can be improved by making on-time payments on your loan EMIs and credit card bills. Creditors are more likely to give loans or credit cards to someone with an unblemished credit history than those who have bounced checks or have overused credit cards.
Credit accounting entries, late payments, current inquiries, and other items are included in your CIBIL report. When deciding whether or not to accept or refuse your credit application, lenders will take into account your payment history of more than 30 days past due.
CIBIL reports indicate an account’s DPD in banking, which indicates how many days it has been late with payments.
Did you know?
Your credit score is highly impacted by DPD and is a critical component of your credit report.
‘Days Past Due’ /DPD in CIBIL Report. What does it mean?
‘Days Past Due’ (DPD full form) indicates when you last submitted payment on an installment or credit line. Your DPD will be zero if you have previously made on-time payments on your invoices; if you haven’t made a payment in 30 days, you will see the number ’30’ on your report.
DPD may use the letters ‘xxx’ in the CIBIL banking section if the lender has not provided information about a borrower’s payment history to the bureau. There is no need to worry about it affecting your credit score or your chances of getting a loan or a credit card. This is especially true if you find it on your credit report.
We can further understand the term ‘DPD’ by looking at an example of a loan that started making payments in March 2016. The defaulted payment default (DPD) for DPD loans will be recorded on borrowers’ credit reports if they miss three consecutive payments starting in April 2016:
What significance does DPD holds in Banking?
EMI payment history is displayed in an easy-to-understand manner to help you understand your previous EMI payments. In order to determine your eligibility for a line of credit, lenders will check your payment history for the past 36 months by clicking below.
Over the past three years, a DPD of 0 implies that all of your bills have been paid on time. This makes you less of a risk to the lending institution.
You may damage your credit score and trustworthiness if you skip a few payments on a credit card bill, but some lenders will still approve your credit application if you skip a few payments. An extended history of missed payments or not paying your debts on time may make it hard for you to get a loan or credit card.
Also Read: Importance of Credit Rating in India
Presence of the Most Current DPD Information in Credit Report
As Your credit score increases as soon as a lender transmits your credit information to a credit reporting agency, which collects and analyzes the information contained in your credit report. In spite of frequent updates from your lender, you might not notice a monthly change in your score.
A failure to meet 30 deadlines in a row will be reflected as a 30 on your credit report, and your DPD will be upgraded to 60 if your creditors contact the credit bureaus again.
It is recommended that you do not miss any payments for more than three months at a time in order to prevent damaging your credit score.
How does CIBIL issues affect DPD report?
Your DPD should not show 0 on your credit report if you have made all of your payments on time. If it does, you should contact the credit bureau to have the error rectified.
As soon as CIBIL receives a request for verification on your behalf from the applicable lender, it will mark your account as “under dispute”. A credit report is updated when the lender provides accurate information to the credit reporting agency, and the ‘under dispute’ classification is removed.
Additionally, the company will provide you with an enhanced credit report that will include your latest CIBIL credit rating.
DPD in Your CIBIL Report: Where can be found?
DPD can be found in your CIBIL report’s ‘Pay Timeline’ section for all credit product accounts. DPD can also be found for any current financing options, such as the BOB line of credit, AXIS bank home loan, and BOI bank loan. This is done by clicking on the appropriate link.
What are other DPD Values –
According to Reserve Bank of India asset category regulations, certain issuers may disclose DPD’s STD, SUB, DBT, and LSS values under certain circumstances. Taking a deeper look at each of these variables, we can see that
- STD – The phrase ‘STD’ indicates that a payment was made within 90 days, also known as the Standard Payment Period.
- SUB – It indicates that expenses were reimbursed after 90 days, but the reimbursements were of poor quality, as indicated by the prefix. These borrowers are considered high-risk assets by financial institutions, according to SUB in CIBIL. Thus they do not lend to them.
- DBT – When an overdue account has not been paid for more than a year, it is branded as DBT; however, borrowers have a reasonable chance of meeting their repayment obligations. Since these borrowers pose a significant risk, most banks prefer not to lend to them and, therefore, reject their loan applications.
- LSS – In DPD reports, a LSS indicates that there is no prospect of payment for a particular customer account. This account has been closed by the bank because the amount owed is uncollectible, and the lending institution rarely approves loan applications from people with LSS in the DPD.
Is there any necessity to Change the Values of DPD in Finance?
CIBIL information included in the DPD has been used by lenders to reject loan applications. As long as the applicant’s credit report was otherwise reasonably clean, the DPD information included in his or her CIBIL report cannot be modified.
In Statuses such as ‘Handled’ and ‘Documented Out’ may be resolved in a single operation; however, it will take some months before the DPD portion of the system becomes stable. The DPD you had a year ago would be completely forgotten in two years, even if it was severe.
Conclusion
In spite of the fact that you don’t plan to apply for a private loan soon, it is a good idea to keep an eye on your credit report. Maintaining your creditworthiness is crucial to being able to access credit in the future. To ensure long-term financial security and well-being, it is imperative to make regular payments and maintain a high credit rating. This will allow you to identify any inconsistencies in your credit history and rectify them before you need the money.
FAQs
Q: what is negative value in DPD loan value?
Ans: In CIBIL, all loan values other than ‘000’ and ‘xxx’ are deemed negative for this calculation. Once an account has been overdue for ninety days, it is considered a non-performing asset. Furthermore,”Written Off” and “Settled” are other harmful statuses.
Q: Is your credit report updated with the most recent DPD information?
Ans: Each time CIBIL receives information about your credit behaviour, the DPD value is updated. Additionally, the DPD value provides the basis for the credit bureau’s analysis of your credit report. Your bank or financial institution may not report your credit activity to the credit bureau regularly, so your DPD may not change every month. Payment of EMIs and debts must be made within three months of the due date. Your credit and creditworthiness might deteriorate as a result.
Q: Is it possible to change the meaning of the DPD?
Ans: Most lenders reject loan applications despite a borrower’s positive credit history since ‘xxx’ in CIBIL or ‘000’ are the only possible values for the DPD section. Your CIBIL report will no longer allow you to change DPD data next month.
Q: How long does it usually take for DPD to stabilize?
Ans: The establishment of a stable DPD may take two years or more if your DPD is insufficient.
