Why Building Credit Is Important for the LGBTQ+ Community

In a new study by the Center for LGBTQ Economic Advancement & Research (CLEAR), The LGBTQI+ Economic and Financial (LEAF) Survey, LGBTQI+ respondents in the survey were asked their top financial priorities. LGBTQ individuals said they wanted to improve their credit score. While 28% said it was a top priority, 43% said it was important. Credit scores are important because it helps people get credit cards and loans, and even purchase a home one day. It’s no surprise this was one of the top financial concerns amongst the LGBTQ community. Credit may be even more crucial to this population because more major life events, like transitioning and IVF (in vitro fertilization), require credit if you cannot pay out of pocket.

Why is building credit important for LGBTQ+ Americans?

Half of LGBTQ respondents in the study said that they had less than $5,000 in savings. Credit can help bridge the gap when an emergency strikes. Experts recommend 3-6 months of an emergency fund. If you don’t have that, having 3-6 months of available credit could come in handy if you ever find yourself in a financial pickle where you need access to funds quickly.

Good credit may also increase your access to financial benefits, like reward-earning credit cards and lower interest rates. When you have good credit, lenders may deem you a less risky borrower, and may give you access to their best interest rates. However if your credit isn’t great, you might pay for that by being denied or through higher interest rates.

Not only that, good credit could allow you access to personal loans to fund things like IVF and gender reassignment procedures. While my partner and I plan to save for a house one day, that’s not our main focus. Our main focus is preparing for her transition. We’re saving money like crazy and she’s applying to jobs that cover transitions in part (but not completely). Transitions can cost as much as $100,000 between the hormones, surgeries, and hair removal, among other things.

Our priorities are different as LGBTQ+ individuals

As someone in the LGBTQ community, I’m aware of the fact that our financial needs are different. And the study highlighted our financial priorities as well. 70% of transgender respondents said that gender-affirming care was a top (27%) or important (43%) priority for them.

One of my good friends, Naomi, is a trans woman who’s in the middle of her gender transition. She’s having trouble making ends meet right now because she needs gender affirming self care, which costs her about $600 a month. She told me recently that she’s currently living paycheck to paycheck because of treatment and her roommate moved out, so she’s having to pay the full lease. She’s worried about finding a new roommate because she’s trans, and doesn’t want to be a victim of a hate crime. Since landlords look at your credit report, Naomi wants a good credit score to find a cheaper apartment than her current one and to take out loans for more gender affirming care, which isn’t covered by her insurance.

On a more personal note, as a lesbian, I have to either adopt or pursue IVF to have children. Both methods are extremely expensive and push my other financial goals to the side. I’ll likely go into debt if I decide to have children because I work at a non-profit and don’t have extra tens of thousands of dollars lying around. Having a good credit score is crucial for me to meet that goal of becoming a parent one day because it could help get me the best rates on an IVF loan.

Ways to set yourself up for financial success

You’ll want to set yourself up financially if you can. Here are some tips to get you started:

1. Start saving for your goals now. Whether you’re planning on IVF down the line, or want to transition, start saving for those goals early on. Even if it’s just $5-$10 a month. I have a savings bucket that I throw all my freelancing work into that’s going to help pay for my future babies. My girlfriend also has a bucket, but she’s saving for a transition. By working on our goals independently of each other, we can accomplish them faster and together.

2. Explore ways to save money. There are many different ways to save, but I personally love saving challenges with friends. I’ve done them with close friends and with my girlfriend. Essentially, you set a goal that’s achievable for both parties and whoever gets there first wins. I make considerably more than my partner, so I have a $1,000 handicap. Plus,I’m currently living rent free at my mom’s place to save for a house. The money I add into our joint saving fund (for all our different goals) has to be after my handicap, so we’re on a more even playing field.

3. Prioritize your spending goals. Money is tight these days. Especially when you have multiple goals you’re working toward. I like to build out timelines for my goals. I want a house, kids, and to help my partner transition.

4. Keep your credit score in good standing. In my opinion, the likelihood that you’re going to take out a loan--for transitioning, for IVF, for a home--is high. If you’re new to credit, I recommend using Self to build your credit. Or become an authorized user on someone’s account who has good credit. And make sure you’re reviewing your credit report several times a year. This helps you stay on track with your credit, and if the bureaus do make a mistake, you can correct it. Overall, increasing your credit gives you a better shot at firm financial footing, because you have more access to financial products to help achieve your goals.

About the author

Moriah Joy Chace is a queer personal finance journalist. She has words in Bankrate, Buzzfeed, and Investopedia. In her spare time, she can be found quilting or hanging with her service dog, Sylvia.

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