Delinquency Rate: Definition, Tracking, and Reporting

What is the delinquency rate?

The delinquency rate is the percentage of loans in a lender’s portfolio with overdue payments. Lenders and analysts commonly measure delinquency once a borrower has missed multiple consecutive payments (for example, 60 days past due), and they use the rate to assess credit performance and risk.

How delinquencies are tracked and reported

• Credit reporting: Lenders report late payments to credit bureaus in stages—commonly 30, 60, 90 days, etc.—so a borrower’s tradeline can show multiple delinquency marks. If a borrower cures the account and later falls behind again, a new delinquency cycle will appear.
• Escalation and default: Many lenders consider an account delinquent after two missed payments and continue monthly reporting while late. For some federal loans, extended delinquency (commonly around 270 days) is treated as default; private loans follow state law and contract terms.
• Collections: Lenders typically attempt internal collections first, then may engage third-party agencies to recover overdue amounts.
• Aggregated reporting: Banks and investors often report delinquency rates segmented by loan type or borrower credit quality to gauge portfolio risk.

Calculating the delinquency rate

Formula:
delinquency rate = (number of delinquent loans) / (total number of loans)

Example:
If a bank has 1,000 loans and 100 are 60+ days past due, the delinquency rate = 100 / 1,000 = 10%.

Public data and common trends

Federal Reserve data provide regularly published delinquency statistics across loan categories. Typical patterns include:
* Higher delinquency rates on certain consumer loan types—residential mortgage and credit card delinquencies are often among the largest contributors to bank delinquency figures.
* Student loans have shown relatively high overall delinquency rates (declining in periods when relief measures were in place).
* Among loan types tracked by banks, residential real estate frequently posts higher delinquency rates, while commercial real estate can show lower rates by comparison—details vary with economic conditions.

Impact on borrowers and lenders

• For borrowers: Delinquent payments harm credit profiles and can make future loan approval more difficult, especially with repeated delinquency cycles.
• For lenders and investors: Rising delinquency rates signal increased credit risk and may prompt tighter underwriting, higher loss reserves, or repositioning of capital.

Key takeaways

• The delinquency rate measures overdue loans as a share of a portfolio and is a primary indicator of credit health.
• Delinquencies are reported in stages (30/60/90+ days); prolonged delinquency can lead to default and collections.
• Regular public data—such as Federal Reserve reports—help track trends across loan categories.
• High or increasing delinquency rates affect both borrower access to credit and lender risk management.