Applying for a loan can be quite tedious, given the filling up of forms and other documentation, not to forget the time spent awaiting a decision. Besides, the world of finance and banking adds to the confusion by using acronyms, which are difficult for the layman to understand.

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Today, we will decode the term Days Past Due, commonly referred to as DPD in banking parlance. DPD is critical to your loan, because if this attribute of your credit information report (CIR) is perceived negatively by a lender, your loan application may be rejected.

What does DPD mean? What are the ways DPD can be reported?DPD appears in the account(s) section of your CIR. Here, it resides with one other piece of information — the month and year of payment. The DPD indicates how many days a payment on that account is late that month. Anything other than “000” is considered negative by a lender.

Up to 36 months of this payment history (with the most recent month displayed first) are provided in this section. For example, if you have taken a loan whose payments started in August 2010 and are three months late on a payment due at the end of September 2010, your DPD may be reflected as follows:DPD    90    60    30    00    00Month/    12-10     11-10    10-10    09-10    08-10Year

Given that your credit history helps a lender ascertain your ability to pay additional debt based on your past performance, having DPD other than “000” on your CIR would imply that you have not met your financial obligations in the past. Hence, lenders may view accounts that are reported with DPD as anything other than “000” negatively and this may affect your chances of a loan approval.It is important to note that some lenders report DPD as per the asset classification norms defined by the RBI, which are as follows:

STD (Standard):    Payments are being made within 90 days. Any account overdue by more than 90 days is classified a non-performing asset (NPA) by lendersSUB (Sub-standard): An account which has remained an NPA for up to 12 monthsDBT (Doubtful):    The account has remained sub-standard for a period of 12 monthsLSS (Loss): An account where loss has been identified and remains uncollectible

Any classification other than “STD” is viewed negatively by lenders during the loan application process.

On occasion, you may see ‘XXX’ reported for your DPD on a certain account. This means the lender has not reported that month’s DPD to CIBIL and hence, there’s no need to worry.The best way to avoid having anything other than DPD of “000” or “STD” on your CIR is to always pay on time, and the best way to always pay on time is to avoid taking more debt than you can comfortably handle with your current income.

The writer is senior vice president - consumer relations, CIBIL (www.cibil.com) and can be reached at creditwise@cibil.com