Calculate credit default rate, number of defaults, or total loans from any two values to find the missing loan risk variable in banking.
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Credit Default Rate Formula
The credit default rate is the percentage of loans in a portfolio that have defaulted. This calculator uses the count of defaulted loans, not the dollar value of those loans.
- CDR = Credit default rate, as a percentage
- D = Number of defaults
- L = Total number of loans
If you leave the credit default rate blank, the calculator uses the number of defaults and total number of loans:
If you leave the number of defaults blank, the calculator rearranges the formula:
If you leave the total number of loans blank, the calculator solves for the loan count:
The calculator requires exactly two of the three fields. It then calculates the missing value. The number of defaults and total number of loans are returned as whole numbers because they represent counts of loans.
Credit Default Rate Reference Ranges
Use these ranges as general interpretation guides. Actual meaning depends on loan type, borrower quality, underwriting standards, and the age of the loan portfolio.
| Credit Default Rate | General Interpretation |
|---|---|
| 0% to 1% | Very low default activity for most loan pools |
| 1% to 3% | Moderate default activity |
| 3% to 7% | Elevated default activity that may require review |
| Above 7% | High default activity for many credit portfolios |
Default Rate Inputs by Loan Portfolio Type
| Input | What to Count | Common Issue |
|---|---|---|
| Number of Defaults | Loans that meet your default definition | Mixing late payments with formal defaults |
| Total Number of Loans | All loans in the measured portfolio or period | Using only active loans and excluding charged-off loans |
| Credit Default Rate | Defaults as a percentage of total loans | Comparing portfolios with different default definitions |
Example Calculations
Example 1: Calculate the credit default rate
You have 18 defaulted loans out of 600 total loans.
The credit default rate is 3.00%.
Example 2: Calculate the number of defaults
You have a credit default rate of 4.5% across 2,000 loans.
The estimated number of defaults is 90 loans.
FAQ
What counts as a default?
A default is usually a loan that has failed to meet its required payment terms for a defined period or has been charged off according to the lender’s rules. The exact definition can vary. For consistent results, use the same default definition for every calculation.
Is credit default rate the same as loss rate?
No. Credit default rate measures how many loans defaulted. Loss rate measures how much money was lost. A portfolio can have a high default rate but a lower loss rate if recoveries are strong, collateral values are high, or defaulted balances are small.
Can the total number of loans be zero?
No. The total number of loans cannot be zero when calculating a default rate because the formula divides by the total loan count. A zero denominator makes the rate undefined.