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How LGBTQ+ Americans Can Build Credit: Best Tips and Hacks

The LGBTQ+ community has faced unique challenges and discrimination. Let’s learn how the LGBTQ+ community can build credit for a strong and sustainable financial future ahead in the country.
How LGBTQ+ Americans Can Build Credit: Best Tips and Hacks
It is important to understand why LGBTQ credit is essential for communities and LGBTQ+ Americans can build credit during Pride Month. Read on to know more.
In this article

Credit plays a crucial role in the financial well-being of individuals and communities. It opens doors to opportunities such as purchasing a home, starting a business, or securing favorable interest rates on loans. However, the state of credit among American LGBTQ+ communities has been a concern.

Beem explores why LGBTQ credit is essential for the communities, discusses how LGBTQ+ Americans can build LGBTQ credit, highlights efforts during Pride Month, and concludes with frequently asked questions.

State of Credit Among American LGBTQ+ Communities 

The LGBTQ+ community has faced unique challenges and discrimination, which can impact their financial stability and LGBTQ credit opportunities. Historically, same-sex couples faced legal barriers, including limited access to marriage and joint financial accounts, which could affect their ability to build credit. Additionally, the struggle for workplace equality and higher rates of homelessness within the community can further contribute to credit challenges.

Why Credit is Important for LGBTQ+ Communities 

Building and maintaining good credit is crucial for everyone, including LGBTQ+ individuals. Here are a few reasons why credit is essential for the communities:

  • Financial Independence: Good credit enables individuals to achieve financial independence and stability, which can help break free from discriminatory practices and achieve economic equality.
  • Access to Housing: A strong credit history improves the chances of renting or owning a home, ensuring safe and secure housing options for LGBTQ+ individuals and families.
  • Employment Opportunities: Some employers may conduct credit checks as part of their hiring process. Maintaining good credit can enhance employment prospects and combat discrimination in the job market.
  • Entrepreneurship: Starting a business requires access to capital and credit. A solid credit history can help LGBTQ+ entrepreneurs secure financing and achieve their entrepreneurial dreams.

Debt of LGBTQ+ Communities

On average, LGBTQ+ individuals face higher student loan debt than their cisgender/heterosexual peers. As per Student Loan Hero, the average student loan debt for LGBTQ+ individuals is $16,000 higher than that of their peers.

Most (90%) LGBTQ+ individuals aged 18 to 40 with student debt have federal student loans. Among them, approximately half owe between $10,000 and under $50,000. Around 32% owe less than $10,000, while 16% owe $50,000 or more.

Various factors contribute to the accumulation of educational debt among LGBTQ+ individuals. Some students may lack financial support from parents unwilling to fund their LGBTQ+ child’s education, adding to the burden of student loans.

According to a survey by Experian, the second most common financial worry among LGBTQ+ individuals, mentioned by 20% of respondents, is paying off debt. The same survey found that 70% of respondents use credit cards to purchase necessities.

In addition to student loan debt, overall debt appears to be a significant concern within the community.

How LGBTQ+ Americans Can Build Credit 

Building LGBTQ credit is a gradual process that requires time, commitment, and responsible financial habits. Here are some steps LGBTQ+ Americans can take to build credit:

Get a Secured Credit Card

It will be a good starting point if you’re new to credit or have a limited credit history. Secured cards require a security deposit and function like regular credit cards, allowing you to establish a positive payment history.

Pay Bills on Time

Timely payment of bills, including credit card bills, rent, utilities, and loans, is essential for building credit. Consistently paying bills on time demonstrates your creditworthiness and responsibility.

Keep Credit Utilization Low

Credit utilization refers to the percentage of available credit you use. Ensure that your credit utilization remains below 30% to maintain a healthy credit score. For example, if you have a credit limit of $1,000, try to keep your balance below $300.

Monitor Your Credit Report

Keep in mind that regularly reviewing your credit report lets you identify errors or discrepancies and take appropriate action. You can request a free credit report from each central credit bureau (Equifax, Experian, and TransUnion) once a year.

Pride Month Credit Building Efforts 

Pride Month, celebrated every June, presents an opportunity to focus on financial empowerment within the community. Here are some initiatives and resources that promote LGBTQ credit building during Pride Month:

Financial Education Workshops

Non-profit organizations, community centers, and financial institutions often organize workshops to provide LGBTQ+ individuals with financial literacy skills, including credit-building strategies.

LGBTQ+ Friendly Financial Services

Some financial institutions offer specialized services catering to the needs of LGBTQ+ individuals, including credit-building products and resources.

Credit Building Campaigns

Pride Month is an ideal time to launch credit-building campaigns that raise awareness about the importance of credit and provide LGBTQ+ individuals with practical tips for improving their credit scores.

Conclusion 

Credit is vital for LGBTQ+ Americans to achieve financial stability, independence, and equal opportunities. Individuals can establish a solid credit history by building LGBTQ credit, such as obtaining a secured credit card, paying bills on time, and keeping credit utilization low.

During Pride Month, various initiatives and resources are available to support credit-building efforts within the community. By empowering themselves financially, people can overcome barriers and pave the way for a brighter future.

FAQs

Can being LGBTQ+ affect credit approval? 

No, being LGBTQ+ should not directly affect credit approval. Credit decisions are based on payment history, income, and debt-to-income ratio, rather than sexual orientation or gender identity.

Are there any LGBTQ+-specific credit-building programs? 

While there may not be specific credit-building programs, various organizations, and financial institutions offer resources and support for people looking to build credit.

Will getting married or entering a civil partnership impact credit scores?

Marriage or the civil partnership itself does not impact credit scores. However, joint financial accounts or shared debts can have an indirect influence. It is essential to manage joint accounts responsibly to maintain good credit.

Can a cosigner help improve credit for LGBTQ+ individuals? 

A cosigner can benefit individuals with limited or poor credit history. However, it’s essential to understand that both the primary account holder and cosigner are equally responsible for the debt, and any late or missed payments can negatively affect both parties’ credit scores.

How to build credit?

Refer to the points above in the passage to successfully build good credit.

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Author

Picture of Nimmy Philip

Nimmy Philip

A content specialist with over 10 years of experience, Nimmy has a knack for creating engaging and compelling content across various mediums. With expertise across journalistic features, emailers, marketing copy and creative writing, Nimmy specializes in lifestyle and entertainment content.

Editor

This page is purely informational. Beem does not provide financial, legal or accounting advice. This article has been prepared for informational purposes only. It is not intended to provide financial, legal or accounting advice and should not be relied on for the same. Please consult your own financial, legal and accounting advisors before engaging in any transactions.

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