Alternative loans are private loans through a lending institution that are not part of the federal government programs. Alternative loans are more expensive than federal government loans and should be only used when all other options have been exhausted. Research all possibilities for scholarships, grants, work-study, and federal loan programs before borrowing from an alternative loan program. If you determine you need an alternative loan, use the helpful comparison chart on the back of this page and research the lenders for additional information. Choose the loan that best suits your needs and remember to borrow only what you need!

ANSWERS TO YOUR QUESTIONS ABOUT CREDIT SCORING

WHAT IS A CREDIT SCORE?
A credit score is a number that indicates how likely you are to pay on a loan or credit card as agreed. It is one piece of information lenders use when evaluating your application for credit. The way you have handled credit in the past has a strong link to how you will probably manage credit in the future.

WHY DO LENDERS USE CREDIT SCORES?
Before the widespread use of credit scoring, a loan officer could make only a subjective interpretation of how likely you were to prepay as agreed. Personal judgment could (and often did) influence whether or not people got the credit they applied for. The availability of credit scores has changed that. Scoring models are objective evaluations.

HOW CAN I IMPROVE MY SCORE?
The key to improving your score is to consistently pay bills on time. Credit scores are based on general payment “patterns”, the mix of credit cards and loans you have, and any indications that you are actively looking for more credit. Your score will improve as you continue to handle your credit obligations responsibly.

Think of a score as a “snapshot” of credit risk – it reflects your risk picture at a specific point in time. A snapshot doesn’t change, but when you take another one you will probably look a little different. Similarly, when your credit information changes, your score changes to reflect that. That’s why lenders obtain your most recent score whenever you apply for credit

WHERE DO SCORES COME FROM?
Statistical models located at major credit bureaus weigh and measure many pieces of information in order to generate a score. A credit score is a composite based on a large number of complex calculations. Scoring models can weigh and balance these varying factors much more quickly and precisely than a human trying to evaluate the same information without the benefit of computerized models.

SCORING FACTS AND FALLACIES

FALLACY: A SCORE IS A “GRADE.”
FACT: A score is a predictor of future performance, not of past behavior. This may seem like a subtle distinction, but it helps to clarify what credit scoring does. Scoring allows lender to identify individuals who are likely to perform well in the future even if credit information reveals past problems.

FALLACY: A POOR SCORE WILL HAUNT ME FOREVER.
FACT: Just the opposite is true. A score is a “snapshot” of an applicant’s potential level of risk at a particular point in time. Scores change with time and with changes in your credit performance. Past credit problems fade as time passes and as recent positive data increases. Lenders obtain new scores just prior to making a decision, so they have the most recent information available.

FALLACY: CREDIT SCORING IS UNFAIR TO MINORITIES
FACT: Credit scoring is a bias-free tool that enables lenders to better forecast an applicant’s likely hood of repayment, and to do so fairly – for everyone.