All about CIBIL DPD

To put it simply, creditworthiness is the ability of the borrowers to discharge all their financial obligations in a timely way. It is primarily assessed by examining their repayment history and their credit score.

In order to do this, lending institutions obtain periodic credit reports from credit rating agencies like Transunion CIBIL. These reports categorise borrowers on the basis of their probability of default and rank them on a scorecard which ranges between 300 and 900.

• If the score is below 500, the customer has frequently defaulted in the past and is at high-risk.
• If the score is between 500 and 700, the customer has a mixed default history and is at medium-risk.
• If the score is greater than 700, the customer has always made payments on time and is at low-risk.

The low-risk customers have high creditworthiness and can get their loans approved quickly. The high-risk customers, on the other hand, would have their loans rejected outright. Although, it is the entire credit report which helps a lender make an approval or rejection decision, the section of the report which they are most likely to rely upon

In a CIBIL report, the DPD value is usually displayed in the following way-

Each one of these indicated values have a certain meaning. These are:

• 000- This simply means that in the month of January 2018, the borrower has paid all his EMIs on time. All the dues in the name of the borrower are clear and no credit is left outstanding. If this value persists for every month, the customer becomes a safe bet. From a lender's point of view, this signifies low-risk, with there being almost no probability of default. Therefore, even if the borrower's credit score is not above 700, with a 000 value for DPD, loans may be sanctioned to them.

• XXX- An XXX report implies that for the month of February 2018, the customer's DPD is not available. This can happen if the lenders from whom the customer had previously availed credit, either did not maintain any repayment records or did not send them across to Transunion CIBIL. Whatever be the case, an XXX value is not considered to have any significant impact on the borrower's credit history or credit score. It is just regarded as 'insufficient data'.

• 30 / 60 / 90- The presence of a number like 30 / 60 / 90 indicates the specific period for which the borrower has defaulted on the payment of EMI. In the instance cited above, the borrower has defaulted for a month in March, for two months in April and for three consecutive months in May. Any mention of these numbers in the credit report turns the customer into a high-risk prospect. Thereby, the lenders might not easily approve their loans. If their credit score is below 500 as well, their loan applications are liable to be rejected straight away.

Are There Any Other DPD Values?

In accordance with the asset classification norms issued by the Reserve Bank of India (RBI), sometimes the values mentioned above are reported in a different form. These include:

• STD- An abbreviation of 'standard payments', STD basically means that all due payments have been cleared by the borrower within the stipulated period of 90 days. Thus, the borrower is deemed to be less risky. Any type of dues which aren't paid within the 90 day period are counted as non-performing assets.

• SUB- SUB stands for sub-standard payments which denotes that the borrower has defaulted for a total time period of less than 12 months. The chances of recovery are extremely slim and therefore, providing any sort of loan products to these borrowers is highly undesirable.

• DBT- A DBT status means that the borrower's account has stayed in the SUB category for a period greater than 12 consecutive months. The chances of recovery are almost next to none and thus, it would be wise for lenders to reject the loan applications of such borrowers.

• LSS- A report which has been tagged as LSS is issued to the borrower who has not made any repayments whatsoever. The lender has lost all hope of fund recovery and has termed the account as 'uncollectible'. There is no possibility of such borrowers ever getting a loan sanctioned. All of these DPD related values when taken together signify what the true creditworthiness of a borrower is and thereby help a lender determine whether a customer is worth their investment.

Can The DPD Values Be Changed?

The probability of changing a DPD value is exceedingly low in the short-term. This is because DPD values are inserted into the credit report every single month and as much as 36 values corresponding to the past 36 months remain visible to the lenders at the same time. In other words, if you default on your payments for a month today, it would continue to be registered on your credit report for the next 36 months. This is why it is better to ensure that you make all the payments due against your name, well in time. Nonetheless, in the long-term, DPD values can be changed. For this, you will have to make sure that your DPD remains 000 for at least 3 years. Post this period, any previous record of a faltering repayment schedule would be automatically deleted from your report and your account will stand clear of defaults.

The Road-Map Ahead

A good credit report is the keyword which lays the foundation for judicious financial management. Not only does it help you obtain inexpensive loans, but it also ascertains that your monetary profile remains efficient and sustainable.

If you are willing to check your credit report and the DPD mentioned within, you can always visit the website of Transunion CIBIL and acquire it for a nominal charge. After all, your creditworthiness is the primary vehicle which drives your portfolio towards financial effectiveness and monetary success.