Financial Inclusion and the LGBTQ Community: Challenges Persist

Gay couple at home using internet and laptop to chat with friends

To many, it may look like the LGBTQ community has made huge strides in overcoming legal and financial discrimination. Marriage equality became the law of the land in 2015, and the Biden administration has already released a stream of executive orders granting various legal protections for LGBTQ people. Access to credit, which was less of an issue to begin with, also widened with a legal reinterpretation of the Equal Credit Opportunity Act.

While solid strides toward financial inclusion for the LGBTQ community have been made in recent years, barriers still exist. Read on to learn more about where financial challenges persist for the LGBTQ community and how to recognize and address them.

A Slow Path to Equality

Before she was seated on the Supreme Court, Ruth Bader Ginsburg won a 1971 court case that resulted in the U.S. Constitution's 14th Amendment being applied on the basis of sex. The amendment's equal protection clause that helped secure civil rights victories for Black Americans was now also interpreted to mean that men and women must have equal rights, which helped address gender-based discrimination. Unfortunately, it didn't explicitly offer protections based on sexual orientation or gender identity.

So up until recently, discrimination against LGBTQ people was often overt and even legal in numerous ways. Eventually, however, courtroom victories led to an expanded interpretation of the 14th Amendment. For instance, a 2015 Supreme Court case interpreted the amendment to mean that same-sex couples could marry in any state, not just states that chose to allow it, solidifying marriage equality nationwide. And in 2020, the Supreme Court decided that employment discrimination against LGBTQ people should also be considered illegal sex discrimination.

Those decisions were hugely impactful to the livelihoods of the LGBTQ community, but they only apply to those specific areas. The federal Equality Act, a bill in the U.S. Congress, would codify equal rights in all key aspects for LGBTQ people, such as lending, employment, housing and access to public services and federally funded programs. In the meantime, President Biden has issued executive orders reversing discriminatory policies including ones that require the Department of Health and Human Services to prohibit LGBTQ health care discrimination and direct the Department of Housing and Urban Development to prohibit LGBTQ discrimination under the Fair Housing Act.

These are all significant strides, but discrimination persists. Currently, some states are passing a record number of laws restricting LGBTQ rights, targeting everything from health care to adoption. Advocacy groups are challenging them, but until it's sorted out in courtrooms, the community is at risk of facing further financial discrimination.

Recognizing Financial Discrimination

Financial discrimination can show up in various ways for the LGBTQ community. As of now, it's illegal to discriminate against LGBTQ people in marriage and in most housing, employment and health care situations. But issues still exist. For example, the state of Alaska was recently under fire after illegally denying financial benefits to same-sex couples years after marriage equality was passed.

It's also important to consider the role of intersectionality in discrimination, says Briona Jenkins, a diversity, equity and inclusion consultant in Austin, Texas, who describes herself as a queer Black woman. "A lot of the time, people think because we've made such progress in the realm of LGBTQIA+ issues and discrimination, that we're all kind of OK," Jenkins explains. "But I think we forget the intersections of people who are both LGBTQ and people of color, or people who are LGBTQ and have a disability. People who are LGBTQ can be more than one thing at any one time, and we have to overcome so much more—and a lot of that deals with finances."

While financial discrimination can appear anywhere, here are some commonly problematic areas to watch out for:

  • Access to funding: There's some good news here. In March 2021, the Consumer Financial Protection Bureau released the updated interpretation of the Equal Credit Opportunity Act making it illegal for lenders to discriminate against a consumer applying for credit (such as loans or credit cards) solely due to sexual orientation or gender identity. While sexual orientation doesn't appear on your credit report or factor into your credit score, that doesn't guarantee you'll be treated fairly by all lenders.
  • Name and gender on accounts: When a transgender or nonbinary person adopts a new name and pronouns, it's psychologically important these are affirmed in all areas of their lives, according to the American Psychiatric Association. However, getting legal documents and identification updated (especially birth certificates) is often a harrowing and expensive process that varies by state. Many financial institutions require legal name or gender marker changes before they will update accounts, which for many LGBTQ people means having financial accounts or cards with the incorrect name. Fortunately, "more credit card companies and banks are creating system allowances that let trans people use their chosen name," says John Auten-Schneider, who runs the personal finance blog Debt Free Guys with his husband David.
  • Homebuying discrimination: In addition to facing discrimination from lenders, it's possible LGBTQ consumers may experience discrimination from real estate agents or sellers in the homebuying process. One way to help reduce this risk is to use a real estate agent who's a member of NAGLREP, an association of LGBTQ real estate agents, since they're familiar with navigating the process for those in the community.
  • Insurance denial: While laws and policies vary by type of insurance, the LGBTQ community has sometimes faced discrimination with life insurance. Auten-Schneider says for those with HIV, there's some progress: "John Hancock offers life insurance to people who have HIV, and it looks like this may become more common," he says.

Laws and policies are always changing, so be sure to check with the American Civil Liberties Union page dedicated to current LGBTQ rights to stay in the know.

How to Address Financial Discrimination

It's important to know your rights so you can determine if you're on the receiving end of illegal discrimination. If you're unable to resolve the situation yourself, you could hire legal representation, or try these routes for recourse:

It's undeniable that the LGBTQ community has made progress in certain areas compared with decades ago, but adequate legal protection and financial inclusion efforts at the federal and state levels still need to be addressed. Until they are, it's important to be aware of what financial discrimination looks like and where you can go for help if you believe you are a victim.

The purpose of this question submission tool is to provide general education on credit reporting. The Ask Experian team cannot respond to each question individually. However, if your question is of interest to a wide audience of consumers, the Experian team may include it in a future post and may also share responses in its social media outreach. If you have a question, others likely have the same question, too. By sharing your questions and our answers, we can help others as well.

Personal credit report disputes cannot be submitted through Ask Experian. To dispute information in your personal credit report, simply follow the instructions provided with it. Your personal credit report includes appropriate contact information including a website address, toll-free telephone number and mailing address.

To submit a dispute online visit Experian's Dispute Center. If you have a current copy of your personal credit report, simply enter the report number where indicated, and follow the instructions provided. If you do not have a current personal report, Experian will provide a free copy when you submit the information requested. Additionally, you may obtain a free copy of your report once a week through April 2022 at AnnualCreditReport.