Credit is an integral part of the modern-day lifestyle. Unlike the previous generation, the current generation does not believe in saving for things and buying them only when their savings can afford the luxury of making a purchase. Today, people prefer to buy things they need and desire and pay for them slowly through EMIs. However, to be able to access credit, having a good CIBIL score is a must and one of the key things that makes or breaks your credit rating is your repayment history. Your repayment record is responsible for 35% of your credit score.
An individual’s credit report is an electronic representation of their credit history. It is a total of all things that affect one’s CIBIL rating: repayment track record or history, credit utilization ratio, hard enquiries or dependency on credit, the age of one’s credit history and the type of credit one has. An important thing that appears on people’s credit reports is DPD or Days Past Due. What is DPD in full form and what does DPD mean? Read on to know.
DPD Full Form and What Does this Term Mean?
DPD full form is Days Past Due. It refers to the number of days that have passed since you missed paying a loan EMI or credit card bill. So, if in someone’s credit report, one finds 15 written under DPD, it simply means that the number of years that have passed since you missed your EMI or credit card bill due date is 15.
The DPD is important and all lenders check it to assess the risk of doing business with a loan applicant. The DPD is indicative of the loan applicant’s creditworthiness and whether or not they can be trusted with credit. A high DPD indicates higher risk for lenders and therefore, when the Days Past Due is a high number, the loan applicant automatically loses the power to negotiate for a low interest rate, higher loan sanction, longer repayment tenor, low loan processing fees and other charges, etc.
I missed a credit card payment or loan EMI by mistake but cleared it immediately after I remembered. When will my DPD get updated in this case? This is a very common question that many loan applicants and credit users have. TransUnion CIBIL receives data from financial institutions each month and based on the data collected, the credit information agency updates an individual’s credit report. So, even if you cleared the missed EMI as soon as you realized your mistake, the DPD will still be 30 and your credit report will only get updated the next month. If you miss an EMI and do not pay it for the next two months, the DPD on your credit report will read 90. Such high DPD can have major repercussions for credit approval and your credit rating.
If the Days Past Due or DPD on your credit report is beyond 60, your CIBIL score will be majorly affected. In this case, you will need to do some damage control for the impact of CIBIL score on home loans is significantly high. To get a housing loan, you must have a CIBIL score above 750. Here’s how you can build and maintain a high CIBIL score.
- If you missed paying a loan EMI or a credit card bill, clear it as soon as possible. This will help you do some damage control. While missing one EMI or credit card bill due date won’t have a major effect on your CIBIL score, missing EMIs and bill due dates often will cause your CIBIL score to go down. So, maintain a clean repayment history.
- The older your credit history, the better will be your credit score. So, always maintain your credit history by never closing old loan accounts and credit cards. Further, maintaining a healthy balance between secured and unsecured loans will help too.
- Maintaining a low credit utilization ratio is also important for a high credit utilization ratio indicates excessive dependency on credit. It is also important to not have too many hard enquiries under one’s name.
Final Words
Doing these simple things will help improve your cibil score over time, i.e. if you do not already have the ideal CIBIL score needed to get a housing loan. Further, if you are a credit user and often access credit, you must make sure the number under the DPD section is never very high.