Before you understand Days past due. Let’s understand Past due which means overdue. For example, let’s assume your credit card payment is due on October 15. You forget to make the payment. On November 16, you finally remember. By then, though, it’s too late. Your bill is past due.
Days Past-due or DPD means, that for any given month, how many months’ worth of payment is unpaid and this information is for each account.
This means that if you have 3 different loans going on, then you will have DPD information for each of those accounts. For each account you can see Days past due information for each month for the last 3 years, i.e., 36 months.
Example – Month 06-19 and DPD value is 90
If DPD value is 90 for a month say 06-19, it means in June 2019, the payment is due for the last 120 days, which means 4 months dues! So you can now understand that the DPD in the last month (May 2019) would be 90 and for Apr 2019 would be 60 and for Mar would be 30.
In case the DPD indication is not ‘000’ or ‘XXX’ it means that you have missed making a payment. The information recorded is up to the last 36 months of payment history.
If in case you have any other information in your report other than ‘000’ or ‘XXX’, which means that you have not been paying the loan or credit card bills on time.
This is a red flag and serves as an alert to the credit institutions that you are not capable of servicing your loan well.
‘XXX’ means then it simply means that the bank has failed to report the data for that month and it does not impact you at all. ‘000’ means the dues are totally clear on that date and nothing is outstanding.
Like many other factors that influence a credit score, DPD is one of the most crucial ones as it tells about your repayment behavior.
“The ABA report defines a delinquency as a late payment that is 30 days or more overdue”
Credit card delinquency is a credit card status that indicates your payment is past due by 30 days or more.
For example, assume a recent college graduate fails to make a payment on his student loans by two days. His loan remains in delinquent status until he either pays, postpone,s or forebears his loan.
Missing your credit card payment puts you at risk of becoming delinquent. At that point in time, your late payment status is reported to the credit bureaus and is included in your credit report.
A late payment is added to your account and your credit card issuer may begin calling, emailing, or sending letters to get you caught up on your account again.
“The rate at which credit card balances become delinquent has been rising, and that has coincided with an increase in younger borrowers entering the credit card market,” Andrew Haughwout, senior vice president at the New York Fed and one of the authors of the blog post, said in a press release
Once your payment is 60 days delinquent, your credit card issuer is allowed to raise your interest rate to the penalty rate. The credit card penalty rate, which is also known as the default rate, is the highest interest rate charged by a creditor or lender.
The penalty rate is charged as a consequence of becoming delinquent on payments by 60 days or more. The penalty rate will remain in effect for six months. After you make six consecutive payments on time, the rate will go back to normal for your existing balance.
Generally, the immediate impact of delinquency is a 25 to 50 point decrease in the borrower’s credit score. However, additional decreases can occur if the delinquency is not corrected thereafter.
“TransUnion’s Industry Insights Report found the credit card delinquency rate reached 1.81% in Q3 2019, rising from 1.71% for Q3 2018”
Check out more such content on this Link