Yes and No! DPD or days past due is a very important consideration for 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. 

Let us look at the different values of DPD and what it means for lenders. How does it impact your capability to get a loan?

DPD values and their meaning

Asset classification in DPD

What lenders think

1

Standard (STD)

Payments being done within 90 days

Creditworthy, high chances of loan approval

2

Special mention account (SMA)

This is a special account created to keep a note of account that previously was standard and now moving towards sub-standard

Needs more scrutiny, not all lenders will be available

3

Sub-standard (SUB)

Payments being done after 90 days

Low credit score, the loan might be available at a high-interest rate

4

Doubtful (DBT)

Those accounts that remain sub-standard for 12 months

No lenders available

5

Loss (LSS)

Those accounts where losses are identified and cannot be collected

No lenders available

 

How can you improve your DPD value?

With little financial discipline, you can very well manage the DPD value. Below are a few ways to improve your DPD value –

  1. Pay your credit card bills on time – Probably the most important factor that contributes to the DPD value and the credit score.
  2. Maintain your credit utilization ratio – The credit utilization ratio tells how much credit you are using out of the allotted limit. Ideally, the credit utilization ratio should be under 30%. A higher credit utilization ratio might seem like there are a lot of financial responsibilities that you are trying to fulfill and can adversely impact your credit score. 
  3. Report any errors in your credit report – Your credit report may have some mistakes which wrongly show a high DPD. A high DPD can affect your credit score negatively hence you must report the error immediately. You can do that by writing to the customer care of the respective credit bureau.