Chime® is a financial technology company, not a bank. Banking services, credit, and debit card provided by The Bancorp Bank, N.A. or Stride Bank, N.A., Members FDIC.

Loans are not always easy to get, especially if your credit is less-than-ideal or you don’t have a credit history. Without loans or emergency savings, covering unexpected expenses can become a challenge.

But don’t worry. If you think your financial situation may prevent you from getting approved for a loan but need cash immediately, some alternative options are available. Read on to discover how to get money without a loan.

Why you can be denied for a loan

More Americans are having trouble getting approved for a personal loan, with one in five individuals facing challenges in the application process.¹ There are many reasons for loan rejections, like:

  1. Low credit score. Credit score requirements vary depending on the type of loan you’re applying for. Generally, you need a minimum FICO® score of 580 to qualify for a personal loan.² The higher your credit score, the better your chances of getting approved.
  2. Insufficient or unstable income. Lenders look at your income to ensure it’s stable and sufficient enough to keep up with your monthly payments. If your income fluctuates too much or isn’t high enough, lenders may not want to take a chance on you since they see you as a riskier borrower.
  3. High debt-to-income ratio. Your debt-to-income ratio, or DTI, is your monthly debt payments divided by your gross monthly income. Though most lenders prefer a DTI ratio of 35% to 40% or less for personal loans, this requirement could change depending on the loan type and your credit score.³ If your DTI is higher than that, it means most of your income goes toward debt repayments, and you may be overextending yourself financially.
  4. Limited credit history. Another common reason for loan rejections is having a limited credit history. With a thin credit file, lenders cannot assess your financial habits and determine whether you’re a creditworthy borrower. For this reason, they may reject your application. A thin credit file typically refers to a credit history with less than five credit accounts.⁴

Evaluate the decision from your lender

If you’re denied a loan, lenders give a reason in the rejection letter, whether related to your credit history, income, debt-to-income ratio, or other factors. Sometimes, a denied loan application could be due to a misunderstanding or mistake. So, if there’s any ambiguity in the decision, contact your lender for clarification.

Is your credit score below the required level?

If you were denied a loan due to a low FICO score, you can take steps to improve it before resubmitting another loan application.

To boost your credit score, you need to know your credit health. If you haven’t already, request a free copy of your credit report from each of the three major credit bureaus by visiting annualcreditreport.com. If you notice any inaccurate negative items in your reports that might be dragging down your FICO score, file a dispute with the credit bureau immediately.

Besides keeping an eye on your credit reports, consolidating high-interest debt, keeping your credit utilization under 30%, and paying bills on time are also effective ways to rebuild your credit.

You may have limited or no credit history

Around 45 million Americans are “credit invisible,” which means they have limited to no credit history.⁵ If you’re one of the many struggling to get a loan due to a thin credit file, consider signing up for a secured credit card or credit builder loan. You can also build your credit from scratch by becoming an authorized user on your family member or friend’s credit card.

Start building credit with the secured Chime Credit Builder Visa® Credit Card - no credit check required.*

4 Alternatives to get money without a loan

Personal loans aren’t your only solution if you need cash immediately. Here’s what to do if you can’t get a loan:

  • Use your 401k. Provided your 401k plan allows loans, borrowing against it can be a quick way to access cash without going through a credit check. As long as you have a vested account balance, a poor credit score won’t matter. However, you’ll have to pay the money back with interest. The maximum amount you can borrow is typically the greater of $10,000 or 50% of your vested account balance, but no more than $50,000.⁶
  • Credit cards. Since a credit card offers a revolving line of credit, you can borrow as you need the money without having to reapply. However, if you carry a balance from month to month on your credit card, you may face hefty fees since many cards come with interest rates of over 20%. You can also use your credit card to get a cash loan from your bank, also known as a cash advance. The maximum amount you can borrow is typically a percentage of your credit limit.
  • Payday alternative loans (PALs). Instead of resorting to high-interest payday loans that are often predatory in nature, consider payday alternative loans at a credit union. The interest rate for a PAL is capped at 28% APR, and the loan amount ranges from $200 to $1,000.⁷ To be eligible for this loan, you must have been a credit union member for at least one month.
  • Take on a side hustle. If you need money now with no loans, consider taking on a side hustle like selling items on Etsy or driving for a rideshare company to make quick money. Unlike loans that often come with hefty interest, the cash you make from a side hustle is yours to keep.

Pros and cons of family and friend loans

Another alternative way to get cash without a loan is to borrow money from friends and family. If you have a good relationship with your friends and family, borrowing money from them could be an alternative worth considering. Just make sure to draw up an agreement in writing to prevent disputes about repayments in the future.

Before asking your friends and family for financial help, consider the pros and cons of borrowing money from them:

Advantages

  • Quick cash access. Unlike financial institutions, your family and friends typically won’t check your credit score or require you to undergo a lengthy application process before lending you money. So, if you need cash immediately, asking your loved ones for help could save you the hassle of applying for a formal loan.
  • Potential flexibility in repayment terms. Because of your close relationship, family and friends may be willing to offer more flexibility in repayment terms compared to formal lenders.
  • No credit bureau reporting for missed payments. The Fair Credit Reporting Act (FCRA) has strict requirements for furnishers who report consumer information to credit bureaus, and typically, only entities like banks and credit card issuers can meet them. Your family and friends generally can’t report you to credit bureaus for missing payments.

Disadvantages

  • Unclear repayment terms. Unlike a formal loan from a bank, borrowing from your parents or best friends could often lack clear repayment terms since they may feel uncomfortable specifying payment schedules. Without laying down the specifics, misunderstandings and conflicts could quickly arise.
  • Risk to the relationship if you can’t repay promptly. One of the biggest downsides of borrowing money from your loved ones is that you could risk straining the relationship if you cannot pay them back in full or on time. In the worst-case scenario, your friends and family could take legal action and sue you in court to recover their money.
  • Complex tax implications for loans and financial gifts. Borrowing money from friends or family without paying interest (or at a rate lower than the market rate) can have tax implications.⁸ If the loan you borrowed was more of a gift, the IRS also has rules about how much money you can receive without triggering gift taxes.⁹ If the amount exceeds this threshold, your family member or friend may need to file a gift tax return.

Take control of your finances and avoid debt traps

If your emergency fund falls short and you must take out a loan, make sure you fully understand the terms and implications before proceeding.

But ideally, you should always have an emergency fund set aside to cover unexpected expenses to avoid unnecessary financial stress. The general rule of thumb is to save enough in your cash reserve to cover at least three to six months of expenses. Learn how to build an emergency fund and take control of your finances.

Chime® is a financial technology company, not a bank. Banking services are provided by The Bancorp Bank, N.A. or Stride Bank, N.A., Members FDIC. The Chime Visa® Debit Card and the Chime Credit Builder Visa® Credit Card are issued by The Bancorp Bank, N.A. or Stride Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa debit and credit cards are accepted. Please see the back of your Card for its issuing bank.

While Chime doesn’t issue personal checkbooks to write checks, Chime Checkbook gives you the freedom to send checks to anyone, anytime, from anywhere. See your issuing bank’s Deposit Account Agreement for full Chime Checkbook details.

By clicking on some of the links above, you will leave the Chime website and be directed to a third-party website. The privacy practices of those third parties may differ from those of Chime. We recommend you review the privacy statements of those third party websites, as Chime is not responsible for those third parties' privacy or security practices.

Third-party trademarks referenced for informational purposes only; no endorsements implied.

Opinions, advice, services, or other information or content expressed or contributed here by customers, users, or others, are those of the respective author(s) or contributor(s) and do not necessarily state or reflect those of The Bancorp Bank, N.A. and Stride Bank, N.A. (“Banks”). Banks are not responsible for the accuracy of any content provided by author(s) or contributor(s).

¹ Information from Federal Reserve Bank of New York's SCE Credit Access Survey as of January 30, 2024: https://www.newyorkfed.org/microeconomics/sce/credit-access#/experiences-credit-applications1

² Information from Experian's What Credit Score Is Needed for a Personal Loan as of January 30, 2024: https://www.experian.com/blogs/ask-experian/what-credit-score-is-needed-for-a-personal-loan/

³ Information from Experian's What Is Debt-To-Income Ratio and Why Does It Matter as of January 30, 2024: https://www.experian.com/blogs/ask-experian/what-is-debt-to-income-ratio-and-why-does-it-matter/

⁴ Information from Experian's What Is a Thin Credit File as of January 30, 2024: https://www.experian.com/blogs/ask-experian/what-is-a-thin-credit-file-and-how-will-it-impact-your-life/

⁵ Information from CFPB's Credit report and scores key terms as of January 30, 2024: https://www.consumerfinance.gov/consumer-tools/credit-reports-and-scores/answers/key-terms/

⁶ Information from the Internal Revenue Service's Retirement Plans FAQs regarding Loans as of January 30, 2024: https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-loans

⁷ Information from MyCreditUnion.gov's Payday Loan Alternatives as of January 30, 2024: https://mycreditunion.gov/life-events/consumer-loans/payday-loan-alternatives

⁸ Information from the Internal Revenue Service's Part I Section 7872 as of January 30, 2024: https://www.irs.gov/pub/irs-drop/rr97-57.pdf

⁹ Information from the Internal Revenue Service's Frequently Asked Questions on Gift Taxes as of January 30, 2024: https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes

* To apply for Credit Builder, you must have received a single qualifying direct deposit of $200 or more to your Chime Checking Account. The qualifying direct deposit must be from your employer, payroll provider, gig economy payer, or benefits payer by Automated Clearing House (ACH) deposit OR Original Credit Transaction (OCT). Bank ACH transfers, Pay Anyone transfers, verification or trial deposits from financial institutions, peer to peer transfers from services such as PayPal, Cash App, or Venmo, mobile check deposits, cash loads or deposits, one-time direct deposits, such as tax refunds and other similar transactions, and any deposit to which Chime deems to not be a qualifying direct deposit are not qualifying direct deposits.

Address: 101 California Street, Floor 5, San Francisco, CA 94111, United States.

No customer support available at HQ. Customer support details available on the website.

© 2013-2024 Chime Financial, Inc. All rights reserved.