What is a 'Delinquency Rate'
A delinquency rate is the percentage of loans within a loan portfolio that have delinquent payments. The delinquency rate is simply the number of loans that have delinquent payments divided by the total number of loans an institution holds. Typically, delinquency rates on loans are affected by the credit quality of the borrower and macroeconomic factors such as unemployment.
BREAKING DOWN 'Delinquency Rate'
For example, if a financial institution has a loan portfolio of 1,000 loans and 100 of those loans have delinquent payments greater than a few months, the delinquency rate would be 10% (100/1,000). Typically, only loans that have payments more than three months overdue are considered delinquent.