Credit reports and scores

Why They Exist and How to Avoid Them

A good credit score and the ability to access credit are key components in building savings, financial stability, and wealth. Unfortunately, the discrimination that many lesbian, gay, bisexual, transgender, and queer (LGBTQ+) people continue to face creates barriers to accessing credit and building a strong credit profile. 

While progress has been made in recent years to combat inequality, LGBTQ+ people continue to be discriminated against in many aspects of everyday life. Though some official legislation is in place to combat discrimination, inequitable and damaging heteronormative and cisnormative policies and attitudes persist in the financial industry and beyond.

According to a 2022 survey by the Center for American Progress, 35% of LGBTQ+ respondents (compared with 28% of non-LGBTQ+ respondents) reported experiencing discrimination that “moderately” or “to a significant degree” affected their financial well-being.

Key Takeaways

  • Despite progress being made, a legacy of discrimination and persecution continues to impact the overall well-being of LGBTQ+ people, including their financial well-being.
  • LGBTQ+ people are less likely to have high credit scores.
  • LGBTQ+ people face discrimination in housing, education, employment, and healthcare that creates credit barriers.
  • There is currently a wage gap between LGBTQ+ and non-LGBTQ+ workers. LGBTQ+ workers typically earn 90 cents or less to the dollar of a typical worker.

Credit Barriers for LGBTQ+ People

LGBTQ+ people continue to face discrimination across essential aspects of everyday life, including housing, education, employment, and healthcare. Historical and current biases in areas such as mortgage lending, venture funding, healthcare, student loans, and the workplace create credit barriers that can lead to increased risk of financial insecurity.

Research also indicates that there is an LGBTQ+ wage gap. LGBTQ+ workers earn around 90 cents for every dollar that an average worker earns, and LGBTQ+ people of color, nonbinary individuals, and transgender men and women earn even less by comparison.

According to a 2019 report by the Center for LGBTQ Economic Advancement and Research, LGBTQ+ adults were nearly twice as likely to indicate that their credit scores were “poor” or “very poor” compared with non-LGBTQ+ adults.

The same report indicates that LGBTQ+ households were 1.25 times more likely to be unbanked (i.e., without a checking, savings, or money market account) or underbanked (i.e., with at least one bank account but reliant on one or more alternative financial service such as a payday loan, pawnshop or title loan, tax refund advance, or check casher in the previous year) than non-LGBTQ+ households.

These disparities intensified when race and gender were factored into the equation, with Black and Hispanic LGBTQ+ households and female LGBTQ+ households reporting even greater discrepancies.

All of these factors can lead to lower credit scores. The Center for LGBTQ Economic Advancement and Research reported that LGBTQ+ people are less likely to have high credit scores and that 16% of LGBTQ people have a poor credit score.

Legislating Protection Against Discrimination

Although the United States has legislation in place against financial discrimination, only recently have specific and explicit protections for LGBTQ+ people begun to be proposed.

In 2020, the U.S. Supreme Court ruling Bostock v. Clayton County confirmed that the 1964 Civil Rights Act extends not only to sex discrimination but also to discrimination based on gender identity and sexual orientation.

Meanwhile, it wasn’t until 2021 that the Consumer Financial Protection Bureau (CFPB) issued an official clarification to the Equal Credit Opportunity Act, stating explicitly that “lenders cannot discriminate based on sexual orientation or gender identity.”

The Equality Act, a proposed amendment to the Civil Rights Act, is currently awaiting U.S. Senate approval. If approved, it would prohibit discrimination on the basis of sex in areas such as employment, housing, education, credit, public services, and federally funded programs, among others.

Although some official protections exist, there’s still plenty of work to be done in terms of changing policies and norms to promote safety and equality for LGBTQ+ people.

The American Civil Liberties Union maintains a resource page for current LGBTQ+ rights. If you think you have been discriminated against based on gender identity or sexual orientation, you can contact them for assistance.

Building Credit as a Member of the LGBTQ+ Community

Despite facing additional barriers, LGBTQ+ people can still build and strengthen their credit in the following ways.

Know and Check Your Credit Score

Understanding how a credit score is calculated and keeping these factors in mind in planning and managing finances is an important step in building a good credit profile. Also, checking your credit report is a good way to see where you stand and where there might be room for improvement. (Note that this can be a sensitive process, especially if you’ve changed your name.) Credit bureaus allow one free credit report check annually through

Having a healthy credit score is not only important in the context of financial decisions such as buying a house or a car. A good credit score can also provide access to more favorable lending terms and rates for credit cards, loans, and insurance policies, and it may open up more options for housing (whether renting or buying) and help save on fees for utilities payments.

On the other hand, a bad credit score can impede financial planning and make it more difficult and expensive to access money when it’s needed, or even to consolidate debt. In turn, because credit type, payment history, and credit utilization ratios factor into the calculation of a credit score, having a bad credit score and borrowing money at a higher interest rate can restrict cash flow and increase the risk of getting into a debt spiral.

Unfortunately, many transgender and nonbinary folks have reported issues with legal first- and last-name changes negatively impacting their credit scores. In the event of a legal name change, Equifax recommends directly contacting them (as well as Experian and TransUnion, the other credit reporting agencies) as soon as possible to confirm documentation of your legal name in your credit file.

Get a Credit Card

One of the factors in building a healthy credit score is credit age, so the sooner you can start building a credit profile, the better. One of the easiest ways to do this is by making regular, timely payments on a credit card.

If you have a bad credit score, or no credit history at all, some options could include:

  • Student credit cards: If you are a student, these can often have lower qualification requirements than other credit cards.
  • Secured credit cards: These require a cash deposit, but they make it easier to get approved since they decrease the risk to the credit card issuer. Some issuers do not require a credit check as part of the application.
  • Alternative credit cards: Some issuers assess creditworthiness without requiring a credit score, and they may take into consideration factors like banking information, income, or employment situation instead.

Make Timely Payments

Timeliness of bill payment is also an important factor in your credit score. Aim to pay off at least the minimum amount due each month, if not the full amount.

If it will not be possible to make a bill payment, get in touch with the bank, credit card issuer, or utility provider as soon as you can to let them know. Many have hardship programs or special payment plans that can be utilized instead of letting missed payments create debt or impact your credit score.

Financial Tips for LGBTQ+ People

LGBTQ+ people have a variety of unique needs and challenges when it comes to housing, employment, healthcare, and family planning. When it comes to personal finances, the following tips can be a good place to start:

  • Look for an LGBTQ+-friendly bank.
  • Find a financial advisor you trust and whose values align with yours.
  • Save for an emergency fund.
  • Improve your financial literacy with free online resources and courses.
  • If you can’t rely on family for help, ask friends and chosen family to support you. This could be as simple as asking for emotional support in difficult situations, or as specific as as co-signing on a loan or credit card, helping out with a deposit for a secured credit card, or being added as an authorized user on another person’s credit card.

How Can LGBTQ+ People Avoid Credit Barriers?

Additional credit barriers can make it more difficult for LGBTQ+ people to build credit. However, understanding how a credit score is calculated, keeping up to date with annual credit report checks, and building a credit profile by opening a credit card and making timely payments are some potential steps to take.

Is There an LGBTQ+ Wage Gap?

Yes. Studies show that LGBTQ+ workers earn 90 cents to every dollar earned by a typical worker, with an even bigger gap for LGBTQ+ people of color, nonbinary individuals, and transgender men and women.

Can Changing Your Name Affect Your Credit Score?

Yes, legally changing your first and last names has the potential to negatively affect your credit score. It’s recommended to contact all three credit reporting agencies as soon as possible after a legal name change to ensure that information on a credit file is up to date.

The Bottom Line

Although there have been some promising changes to legislation in recent years, discrimination against LGBTQ+ people persists in the financial sector and beyond. As a result, LGBTQ+ people often experience additional barriers in building and accessing credit.

Steps that can be taken to improve credit health include monitoring credit reports, making timely payments on a credit card, and managing personal finances with credit factors in mind.

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