When you apply for a loan or credit card with any of the banks or financial institutions, the institution checks your credit history to ascertain your credit worthiness. Thus, the institutions like CIBIL generates your CIBIL credit report. Applicants having a healthy credit report and a high CIBIL score have better chances of getting loans and that too at a comparatively lower rate of interest.
An applicant can generate his credit report and know his CIBIL score by visiting the CIBIL TransUnion website. The applicant gets a detailed credit report along with the CIBIL score. There is a section in the report called CIBIL DPD (Days Past Due). CIBIL report and credit score are necessary for getting the loan approved. But DPD plays a very important role when it comes to loan approval by the institution.
What is Days Past Due in a CIBIL Report?
Days Past Due or DPD indicates the financial habit of the loan applicant. It shows how many months’ worth of EMI is not paid by the applicant for a specific month. The applicant will get a separate DPD for every credit he has taken from the market. These might be personal loans, home loans, education loans, etc. For every loan, a DPD is generated which is provided to CIBIL by the institution which grants the loan to the applicant.
For example, if an applicant has 3 different loans, such as a home loan, a car loan and an education loan against his name, he will have three different DPD reports mentioned in his CIBIL report. DPD is available for all credit accounts for a period of past three years. The lender sends the report to CIBIL regarding the timely payment or default of the EMI every month. In case you default on an EMI for one month, you will have to wait for three years or 36 months for it to go off your visible DPD records. Thus it is always advisable for the borrower to pay off EMIs on time without defaulting on the payment as one small mistake can cost you huge for years to come.
Format of DPD Value
Every CIBIL report has a section that is especially dedicated to show the applicant’s DPD record. CIBIL DPD report is displayed in the following format:
- 000 – The value 000 signifies that the applicant has cleared off all his dues for the month of January 2017. It shows that dues have been cleared on that date and no credit is outstanding for the month. This is the safest and most favourable condition. If the DPD value for every month is 000, then it means that the applicant is very good with his finances and lenders pay them loans easily as they are considered as the least risky propositions for loans. Even if the applicant has a relatively lower credit score but a great DPD report, lenders easily sanction loans to them.
- XXX – This value is showcased in the report when the report is not provided by the lender to CIBIL TransUnion. This value has no impact on the applicant and he is considered safe in this case. In this case, XXX value shows that the bank has not submitted the data of February 2017 to CIBIL.
- 30, 60 or 90 – A number mentioned in the DPD report signifies that the applicant has defaulted at the time of EMI payment and has not paid the EMI amount till the mentioned day. Any number whether 30 or 90 has a negative impact on the credit report and eventually on the credit score. This shows that the applicant’s creditworthiness is low.
If the applicant misses the payment for the first month, 30 is mentioned in his DPD report as it can be seen in the report for the month of March 2017. In case he fails to make EMI payments for 2 months, 60 will be mentioned in his DPD report like it is shown for April 2017. Finance experts suggest that even though a person might not be able to make payments on time, they must ensure that they do not default on their repayments by more than 90 days.
Other Reported DPD Values
Some lenders report these values in different forms as per asset clarification norms set by RBI. Values that appear for DPD under such conditions are – STD, SUB, DBT and LSS. Let us discuss about each value in detail:
- STD – This is considered as the Standard Payment which means that the payment has been made within 90 days. Payments not made within 90 days are considered as non-performing assets (NPA).
- SUB – It denotes sub-standard payments and shows that payments have not been made for up to 12 months. But there are chances of recovery of funds. These borrowers are considered as risky investments.
- DBT – It denotes that the applicant has not been making EMI payments for more than 12 months. However, there are still chances of repayments from the borrower’s end. These applicants are considered very risky and most banks prefer to not approve their loan applications.
- LSS – The account for which the bank loses all hopes of repayment is tagged as LSS on DPD reports. The amount for that account has been identified as uncollectible. Such applicants can rarely get loans in future in whose DPD report, LSS has been mentioned.
How to Change DPD Values in CIBIL Report
As DPD values are added every month and a maximum of 36 such values are mentioned on the report, a small mistake in making payments remains visible for 36 months. There is no way to change values in DPD report. In case you have defaulted on your payments in one month, try to clear it as soon as possible and be punctual with your payments for the next 36 terms. Your report will be clean after 36 such payments. Banks consider those applicants who have defaulted on their payment once or twice in the past but have been regular in paying off their debts otherwise. But it is toughest to get loans sanctioned for those applicants in whose credit report LSS has been mentioned in DPD.