Understanding 'Days Past Due' in CIBIL Reports
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What is Days Past Due in CIBIL Reports?

What is Days Past Due in CIBIL Reports?

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Explore the impact of Days Past Due (DPDs) on your CIBIL report in the context of education loans. Learn about types of DPDs, clearing DPDs, credit score effects, and tips for managing one-time settlements.

GyanDhan
Ananya Ghai
Updated on:  30 Jan 2024  | Reviewed By: 
Aman 
| 497 | 7  min read

Education loans act as a bridge that covers the financial gap. While these loans provide a valuable resource for students, it's crucial to comprehend the various components that come with them. One significant aspect is the CIBIL report and its concept of Days Past Due (DPDs). Figuring out what DPD means, understanding how it affects your ability to get a loan, and learning how to clear it are essential for students dealing with education loans. 

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What are DPDs in CIBIL Report?

Days Past Due (DPD) in CIBIL report is a crucial metric reflected in the payment history section of your credit report, revealing the number of days a borrower has exceeded the due date for an EMI or credit card payment. Education loan lenders carefully assess DPDs when evaluating loan applications, making it a significant factor in the approval or rejection process.

A DPD entry of '000' indicates that you have consistently made timely payments in the past, contributing positively to your credit history. Conversely, if you missed a payment by, for instance, 40 days, your credit report will display "40" for the corresponding month, signaling a delayed payment.

In some cases, the DPD section might show "XXX," suggesting that the lender has not furnished the payment history details to the credit bureau. Fortunately, encountering "XXX" in your credit report does not negatively impact your credit score or jeopardize your prospects for loan or credit card approval in the future. It simply implies that the lender has not provided this specific information to the credit reporting agency.

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Types of DPDs in CIBIL Report

  1. list items DPDs in CIBIL report reflect the borrower's discipline in meeting EMI obligations over the past 36 months. A '000' DPD for all 36 months indicates consistent and timely repayment, showcasing financial discipline.
  2. list items DPDs in CIBIL report provide a comprehensive payment timeline, offering a detailed view of the borrower's credit behavior.
  3. list items Lenders scrutinize DPDs in CIBIL reports when assessing credit applications to determine if any payments have been missed in the borrower's history. A consistent '000' DPD assures lenders of prudent and on-time credit repayment, lowering the perceived risk.

Please note that occasionally missing the deadline also has a negative impact on your credit score and creditworthiness but some lenders might still approve your credit application. However, frequent misses and non-payment of dues for long pose a high risk for lenders and they may refrain from approving your loans or credit card applications. 

 

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How can you clear DPD in CIBIL report?

Maintaining a positive Days Past Due (DPD) value is essential for a healthy credit history. By adopting sound financial practices, you can enhance your DPD value and bolster your creditworthiness. Below are five sure-shot ways to improve your DPD value –

  1. list items Timely payment of credit card bills: Ensuring punctual payment of credit card bills is crucial for maintaining a favorable DPD value and positively impacting your credit score.
  2. list items Manage credit utilization ratio: Maintain a credit utilization ratio below 30% to demonstrate responsible credit usage. A higher ratio may suggest financial strain and potentially harm your credit score.
  3. list items Address credit report errors: Regularly review your credit report for inaccuracies that could inaccurately reflect a high DPD. If errors are identified, promptly report them to the customer care of the relevant credit bureau in writing.
  4. list items Exercise financial discipline: Cultivate good financial habits to effectively manage and improve your DPD value. Prioritize timely payments and responsible credit usage to bolster your creditworthiness.
  5. list items Monitor and budget: Keep a close eye on your financial commitments and create a budget to ensure timely payments. Monitoring your spending helps prevent potential issues that may lead to delayed payments.
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Impact of DPDs on your Credit Score

Regularly missing payments or having a high number of DPDs can lower your credit score, making it challenging to secure credit in the future. When DPDs accumulate on your education loan, it can have a negative impact on your credit score. Consider your payment history as a significant factor in determining your creditworthiness.

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What is One-Time Settlement on CIBIL Score?

A one-time settlement involves negotiating with the lender to pay a lump sum amount that is less than the total outstanding loan. While this can provide financial relief, it's crucial to understand the implications on your credit score.

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What is the Impact of One-Time Settlement on CIBIL Score?

Settling your education loan through a one-time settlement may help resolve immediate financial challenges, but it may also have consequences on your credit score. Generally, a one-time settlement is considered a "settled" account on your credit report, which can be viewed negatively by lenders. This could result in a temporary dip in your CIBIL score.

The settlement impact on your CIBIL report, stays on the report for a span of seven years. Within this period, if an applicant seeks another loan, it may serve as a warning signal for lenders regarding the potential risk of default in repayment, potentially leading to the rejection of the loan application.

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What are the Reasons for Loan Settlement?

Loan settlement arises in situations where borrowers are unable to repay their loans on time. If persistent default occurs, borrowers can approach the bank, providing genuine reasons such as illness, injury, job loss, or other valid explanations. The bank may then extend a one-time settlement option upon the borrower's request.

In such instances, the borrower can take a designated period to arrange and pay the outstanding amount in a single installment. Upon the borrower's acceptance of the bank's settlement offer and payment of the agreed-upon amount, the credit report reflects a change in the loan status, marking it as 'settled.'

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Three Tips for Minimizing the Impact of One-Time Settlement on CIBIL Score

  • list items Negotiate favorable terms: When opting for a one-time settlement, try to negotiate terms that have a minimal impact on your credit score.
  • list items Clear communication: Keep communication open with your lender and ensure that the settlement agreement is accurately reflected on your credit report.
  • list items Rebuilding credit: After settling your education loan, focus on rebuilding your credit by making timely payments on other debts and maintaining responsible financial habits.

DPD in CIBIL report is a crucial factor for education loan lenders before approving a loan. It is a reflection of the applicant’s creditworthiness and past credit discipline. Lenders use it as a benchmark to assess the future behavior of the applicant. Whether you get a loan after DPD depends on the DPD value. To stay informed with such nuances borrowers must get expert advice. Hence, to always be on the top of your game you should go on your abroad education journey with expert guidance. One such platform is GyanDhan, a team of education loan experts.

GyanDhan serves as the ultimate solution for study abroad students, offering assistance throughout the entire education loan process, from selecting the best option to the actual disbursement. Our team of experts not only connects students with various education loan options but also provides personalized financial advice and facilitates end-to-end services related to abroad education loans – all at no cost. Remember, a proactive and responsible approach to loan repayment is key to building a positive credit history and ensuring financial stability in the long run.

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frequently asked questions

What is the minimum CIBIL score required for an education loan?

A CIBIL score of 720 or higher significantly enhances eligibility for an education loan. While banks may consider loan applications with lower CIBIL scores for credit card-related matters, the severity of the issue plays a role. Conversely, the majority of Non-Banking Financial Companies (NBFCs) in India typically mandate a CIBIL score of at least 650 for both co-applicants and loan applicants.

What is the meaning of "Days Past Due"?

Days Past Due meaning is the number of days an individual has missed a payment or has been late on a payment. 

How to clear DPD in CIBIL report?

To clear DPD in the CIBIL report borrowers must ensure timely payments on credit accounts and settle any outstanding dues immediately.

Can I get a loan after an education loan settlement?

Yes, it is possible to obtain a loan after settling an education loan. However, settling an education loan may have initially affected your credit, so it's important to monitor and improve your credit score over time. Before applying for a new loan, consider maintaining stable employment, and managing your finances responsibly. 

How long does it take to maintain CIBIL score after settlement?

The CIBIL report maintains the record of the settlement of loans for a time span of 7 years.

How can I improve my credit score?

You can improve your credit score y doing the following -

  • list items Paying the credit card dues or loan EMIs on time
  • list items Maintaining the ideal credit utilization ratio
  • list items Not applying for loans or credit cards through multiple lenders at the same time
  • list items Reducing external liabilities significantly
  • list items Reporting any errors or fraudulent entries in the credit report of the applicant

Does part payment of loan the same as settlement of loan?

No, Part-payment of a loan happens when someone can afford to pay back some of the loan early to reduce the total amount owed and save on interest. Loan settlement is when a person can't pay back the full loan and agrees with the lender to pay a lesser amount than what was originally owed.

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