LGBTQ+ Credit Barriers: Why They Exist and How to Avoid Them

Members of the LGBTQI+ community are less likely to have high credit scores

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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, queer, and Intersex (LGBTQI+) 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, LGBTQI+ people continue to be discriminated against in many aspects of everyday life. Though some official legislation is in place to combat discrimination, inequitable heteronormative and cisnormative policies and attitudes persist in the financial industry.

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

Key Takeaways

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

Credit Barriers for LGBTQI+ People

LGBTQI+ people continue to face discrimination in different aspects of everyday life, including housing, education, employment, and healthcare. Historical biases, still present in mortgage lending, venture funding, healthcare, student loans, and the workplace, create credit barriers; these credit barriers can lead to an increased risk of financial insecurity.

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

Twenty-three percent of the LGBTQI+ adults in the same survey reported not having a checking or savings account (also called being "unbanked"). Being unbanked impacts people's ability to build financial stability; this is one contributing factor in the LGBTQI+ communities' economic insecurity, although all of these factors—discrimination due to historical biases, the wage gap between LGBTQI+ and heterosexual and cis-gendered populations, the prevalence of being unbanked—can lead to lower credit scores.

According to a 2023 report by the Center for LGBTQ Economic Advancement and Research, 53% of the LGBTQI+ respondents to a survey (conducted between Dec 2022 and January 2023) said they had a credit score of less than 700, compared to only 40% of the non-LGBTQI+ respondents.

Legislation Protecting Against Discrimination

Although the United States has had legislation in place that shields protected groups (identified by their race/ethnicity, country of origin, age, religion, marital status, etc.) from discrimination, only recently have specific and explicit protections for LGBTQI+ people begun to be proposed—although not always successfully.

In 2020, a 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. Although this ruling was successfully passed in June 2020, it only protects LGBTQI+ individuals from employment discrimination.

The Equality Act was a proposed amendment to the Civil Rights Act that—if passed—would further expand these protections from discrimination (to include housing, education, credit, public services, and federally funded programs, among others). Although it passed the House vote in February 2021, it did not advance any further.

In March 2021, 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.”

Although some legal protections exist, there’s still plenty of work to be done in terms of changing policies to promote safety and equality for LGBTQI+ 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 LGBTQI+ Community

Despite facing additional barriers, LGBTQI+ 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). (Keep in mind: For those individuals who've changed their names to better reflect their gender identity, this can be a sensitive process.) Credit bureaus allow one free credit report check annually through AnnualCreditReport.com.

A healthy credit score is important in the context of many financial decisions, including 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; it may also open up more housing options (whether you are renting or buying).

On the other hand, a bad credit score can impede financial planning. It can 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 credit scores, 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 individuals 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; 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, here are some options to build your credit:

  • Student credit cards: If you are a student, student credit cards often have lower qualification requirements than other credit cards.
  • Secured credit cards: Secured credit cards require a cash deposit, but they are easier to get approved for. 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 other factors when evaluating applications, such as banking information, income, or employment situation.

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. Many have hardship programs—or special payment plans—that can be utilized so that missed payments don't result in extra debt or impact your credit score.

Financial Tips for LGBTQI+ People

LGBTQI+ 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 LGBTQI+-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 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 LGBTQI+ 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 LGBTQI+ Wage Gap?

Yes, studies show that LGBTQI+ 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 important 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 LGBTQI+ people persists in the financial sector (and beyond). As a result, LGBTQI+ 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.

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. Center for American Progress. “Discrimination and Barriers to Well-Being: The State of the LGBTQI+ Community in 2022.”

  2. Human Rights Campaign. “The Wage Gap Among LGBTQ+ Workers in the United States.”

  3. Colorful Capital. “Barriers & Exclusion: A Baseline Study on the LGBTQ+ Experience in Venture Funding.”

  4. Center for LGBTQ Economic Advancement & Research. “The Burden of LGBTQ Student Loan Debt.”

  5. Center for LGBTQ Economic Advancement & Research. “The LGBTQI+ Economic and Financial (LEAF) Survey: Executive Summary,” Page 3.

  6. Center for American Progress. “Beyond Bostock: The Future of LGBTQ Civil Rights.”

  7. Congress.gov, U.S. Congress. “H.R.3185—Equality Act: Summary.”

  8. Consumer Financial Protection Bureau. “CFPB Clarifies That Discrimination by Lenders on the Basis of Sexual Orientation and Gender Identity Is Illegal.”

  9. AnnualCreditReport.com. “Your Rights to Your Free Credit Reports.”

  10. myFICO. “What Is a Credit Score?

  11. myFICO. “What’s in my FICO® Scores?

  12. National Consumer Law Center. “Group Letter Urging Credit Bureaus to Fix Credit Reporting Problems for Transgender and Nonbinary Customers.”

  13. Equifax. “Supporting Transgender and Non-binary People with Name Changes and Credit Reports.”

  14. myFICO. “How to Build Credit.”

  15. myFICO. “What Is Payment History?

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Guide to Finance for LGBTQ+ People