Credit has a lot of different meanings. Here we’re talking about money that’s given to you under an agreement, which you repay. In practical terms, this could be a car loan, mortgage loan or credit card where you can charge up to a predetermined limit.
In each of these cases, a lender has agreed to cover big-ticket expenses (like a car or house) and be repaid over time by the borrower — that’s you.
While lenders unfortunately have track records of anti-LGBTQ practices, there are also valid reasons lenders deny loans or assess higher interest rates. If you don’t get the loan terms you want, it might be discrimination. But it might be that lenders consider you a bad bet. (Yikes.)
Be honest about your creditworthiness. If you have a history of late payments or defaults, it’s not the lender; it’s you, boo.
If you’re an otherwise creditworthy applicant and things don’t go your way, it could be discrimination. Here are a few real-world examples of what LGBTQ credit discrimination looks like.
Same-sex couples are denied home mortgages far more often than different-sex couples.
Assuming that you’re otherwise attractive from a mortgage lender's perspective (you're not self-employed, your debt-to-income ratio isn't excessive, your credit score is good and you make enough income), this could be an instance of discrimination.
Lenders may assess a queer borrower a higher interest rate than they would a cis, straight borrower with a similar application.
When same-sex couples are approved for mortgage loans, for instance, they often pay more in closing costs and interest, the National Community Reinvestment Coalition found.
You can’t really know if you're being charged a higher interest rate than a similar applicant. But you can comparison shop for loans to get an idea of what’s fair. Get quotes from at least three lenders. Carefully review the terms and conditions, including interest rates, before you commit.
Lenders can legally ask about your spouse's income if they are a co-applicant. They can also ask if you receive alimony, child support or other spousal payments where the loss of these payments could impact your ability to repay the loan.
If your spouse’s income isn’t relevant to your ability to repay, or they’re not listed on your loan application, a lender shouldn’t fish for personal information. Lenders who ask marital status questions that seem irrelevant or invasive could be discriminating.
Lenders must treat people equally. They cannot discriminate based on gender identity, gender conformity or sexuality.
If a lender discovers that you're trans due to a credit report's use of a deadname, they cannot change the way they treat you.
For a same-sex married couple, lenders cannot request any extra documentation, such as documentation beyond the marriage license that proves your relationship.
Many LGBTQ people have a finely-tuned sense for this sort of subtle discrimination, honed through repeat encounters with homophobia and transphobia. If you think something is off, trust your gut. You have other options of lenders, and you don't have to give someone your business who doesn’t treat you fairly.
The best way to protect yourself against discrimination is to be prepared when shopping for a loan. Here are some ways to ensure you’re prepared.
In March of 2021, LGBTQ people gained federal protection against credit discrimination.
Thanks to a rule change by the Consumer Financial Protection Bureau (CFPB), it’s no longer legal for lenders to discriminate on the basis of gender identity or sexuality. The agency clarified the existing sex discriminations regulation in the Equal Credit Opportunity Act to expressly include sexual orientation and gender discrimination.
The Equal Credit Opportunity Act now prevents discrimination based on actual or perceived gender and sex nonconformity. LGBTQ consumers who believe they've been discriminated against can now launch a complaint with the CFPB who will investigate the incident.
Credit discrimination for gender identity and sexuality is also prohibited in the following 15 states as well as Washington D.C.:
Additionally, North Dakota and Alaska interpret existing sex discrimination laws to cover sexuality and gender identity.
Earlier this year, the House of Representatives passed the Equality Act. This act, which is currently under the Senate’s consideration, would codify protections for LGBTQ people across all financial services.
We're hoping the Equality Act advances to cement full financial protection for LGBTQ Americans. In the meantime, what should you do if you think you've faced credit discrimination?
The CFPB rule change provides a national option to curb anti-LGBTQ lending practices. But it’s up to us to hold lenders accountable. Knowing what anti-queer credit discrimination looks like makes you an empowered loan shopper.