In this CLEAR Finance Chat, the Center for LGBTQ Economic Advancement & Research’s Executive Director, Spencer Watson, sat down to chat with Billie Simmons, Co-Founder of Daylight. Daylight is a new online platform launched in late 2020 to create digital banking solutions designed to serve LGBTQ communities.
The pair discussed credit reports and issues trans and nonbinary consumers working with credit bureaus to recognize them after they have changed their name and legal documents. Billie describes issues getting complete and accurate credit reports, and also discrimination and stressful situations when trans or gender-nonconforming consumers’ credit reports include their previous names (also called “dead” names) that out them to others.
They also talked about some of the current workarounds that trans and nonbinary folks are able to use to access credit and credit reports in their own names, as well as the need for systemic solutions from credit bureaus and other consumer reporting agencies.
What issues have you heard about that trans folk have in relation to their credit reports?
Well I think the main thing to establish is that no one really knows what really happens when you update your name, whether it is legally or whether it is on certain cards. Anectodally, I have heard about a number of different outcomes from this: very often your score takes a dip. Personally, I have experienced it splitting in two. So you have your credit score in your dead name and your credit score in your chosen name. There are some situations that I have read about where people have been unable to update their name on their credit score because they still do not have credit products in their new name or they refuse to take on new debt—which they certainly should not have to in order to have an accurate credit report.
So I think what we are dealing with is this system that is incredibly outdated and does not really react in ways that we can predict or account for—for no real reason. And I think that is what has made this problem so unwieldy, because when speaking to a number of people actually at the “Big Three” credit bureaus a lot of them do not actually know why the scores do the things that they do, especially when it comes to things like identities that have not been accounted for.
You mentioned a couple different issues there. Why is it such a big issue for trans folks to have their dead names, or previous names, on their credit report or to have duplicate files at credit bureaus?
To me there is a very straight line drawn between having your dead names on your credit reports and employment and housing discrimination. My dead name is very obviously not a traditional “woman’s” name and so if someone who is vetting me to rent an apartment or hire me sees that on my report, that is outing me. And we do not live, unfortunately, in a world where trans and nonbinary people, or indeed the wider LGBT community, have “good faith” and are accepted across the country or the world.
So there is this very straightforward, like, it outs you as a trans person. In addition we have seen higher rates of being flagged for fraudulent activity, which can obviously be an unpleasant experience and certainly not something that an already vulnerable community needs to have is additional levels of discrimination.
And the other thing that comes to mind, which is really an emotional thing, it is really unpleasant to be consistently dead named by credit products, by accounts, emails, and letters. Receiving a letter to your home addressed to your dead name is an incredibly traumatic experience for some people—for most people I would wager. And it seems like this is an issue that is not really being taken seriously by a lot of bureaus. And I think it is not enough to say that it is an unpleasant experience but you can create that direct line to employment and housing discrimination as well.
You mentioned the issue of actual processes at the credit bureaus, or what credit bureaus are doing or not doing to resolve these issues. So what is it about consumer reports, or the processes at credit bureaus, that is really contributing to these problems for trans consumers?
It really is something that is a widespread problem in our financial industry at large. Credit scores as we know them were invented in the 1950s. They were built for cis/straight white men and they have not really been updated since, despite huge societal changes. If you think about the ways that we lived our lives in the 1950s versus now it would be unrecognizable to someone to compare.
This is part of the reason that we formed Daylight was because in the same way that credit bureaus struggle to innovate because they have these very outdated systems that are built on code and databases that people barely even code in anymore because they is so outdated the same thing happens with traditional financial institutions like big banks. And both institutions struggle to innovate because of that. They arere not built for us in the first place and so there is not a lot that they can do, I can imagine.
You have a personal story and experience with this issue, and so I hope you can take a second to elaborate on that a little bit and tell us anything you are willing to share with us about your personal experience with credit reports.
Well, I am firstly very lucky as a white relatively well-off trans woman. And so, I think that my own personal story I will caveat that honestly I have definitely had mostly best-case scenarios: I live in a metropolitan city. I have not personally been, to my knowledge, discriminated against for housing but there are some very serious stories out there of people—especially trans women of color—who are experiencing this discrimination.
For me, I cannot get an accurate score because I still have one credit card in my dead name. It is seemingly impossible to update, but also seemingly impossible to shut down. And on a lot of my credit scoring softwares that I have access to—whether that is in one of my banking products or a separate product—it really is luck if I am going to get an accurate credit score that actually reflects all of my credit products that I have.
A couple of months ago I did a full audit of my own credit. So I listed down all the different accounts I have, all the different balances I have, and went through and tried basically every credit reporting software out there—and none of them could get my actual credit history correct. Actually, none of them. And that is just a failure of service, to be honest. Because no one is actually able to see my credit score as it is—before you even get into should credit scores be used to determine employment worthiness or housing worthiness, which spoiler alert they should not. It is just frustrating to be receiving a sub-par product.
Beyond that at one of my current accounts, my checking accounts, they have a built-in credit product and even though I have updated my name legally, and have updated my account’s name with my legal documentation there is no way to update my credit scoring software. And there is also no way—when you look at their how-tos and how to update it—they just say “update your cards” they do not give any way to report it in the software itself and they also give you an email every month that you cannot opt out of unless you want to go on and access the product that just dead names me in the subject line every month. That sucks. That is a horrible experience for me. It could potentially put me in danger. It definitely could potentially out me if someone was looking at my email or able to access that. And it is really not good enough: there has to be better solutions in place.
Let us talk about some of those solutions. In your case, it sounds like you have not been able to fix those problems with your credit report at all. What are workaround solutions that you are aware that you have utilized or others you aware of have used to access credit in their own names or to fix other issues that they have had with their credit reports with regard to names and those types of issues?
There are a lot of kind of “hacky” solutions I suppose. I have definitely read about people getting authorized cards on their accounts in their chosen name which allows them at least to use their card out in the world without being deadnamed or putting themselves in danger. It does not do anything to their actual credit score unfortunately.
The advice that we are given systemically is to report the name change to the bureaus directly. Very often they will come back with “Well you need to update your credit cards in those names first.” This can create a vicious cycle where oftentimes you cannot get new lines of credit or update your credit cards, and then you are forced to live with an outdated credit report.
We are starting to see some goodwill from those bureaus that is recognizing that they do need to innovate. And I think we will start to see—or I know we will start to see, since I have started some conversations with these companies—a better awareness of the challenges that the trans and nonbinary communities face, and starting to think ways we can build in a more seamless experience into updating these things.
The other thing is there is an interesting crop of new credit products that recognize that credit scores are outdates, and indeed identity in the U.S. is outdated, and allows you access to credit products that do not require access to a credit score. It takes your employment income or various different innovative solutions.
If its about your credit report, because obviously that feeds into your access to employment or housing, you are going to have to—it is part of a larger system—so you kind of have to play the game unfortunately. If it is about access to credit, I think there are other options out there, but I would be an informed consumer and make sure you are not getting into anything that is going to put you in financial hardship.
On our side, and something that we, certainly you and I have connected on and both have in our mission, is advocating for change at the systemic level and starting to work with these companies to try and make things better for our communities, because it is very long overdue.
What would you recommend that CRAs do about their internal processes—or things they can do on their side—in order to fix the problems that you are pointing to with credit reports and other consumer reports?
The main thing is make it easy to update your name on these reports. Do not require it to be based on existing credit products or new credit products. Recognize that this is a unique case, and not something that you can apply to the rest of the population and we need products based on our unique needs.
And beyond that, something that we only touched on briefly, the listing of deadnames or previous names in credit reports. We have to think of a better way of handling that and thinking about—whenever I talk to any of these larger companies I really try and push them to think about their mental models for the way that they think about the world, because we as a society think of names and identity as intrinsically linked and fixed, and think of wanting to change those things as intrinsically bad or inherently bad. And we have to fix that mental model.
A little plug here for Daylight—when we have trans names on cards and allow people to put whatever name people identify with on their card without it being attached to their identity documents that was a big push that we had to do with our various partners because the immediate question was “Well won’t people use this for fraud?” And we are always put in with other people who have bad intentions or bad faith. And we have the power and the ability to work through those preconceived notions.
Personally, I would advocate for in this specific case expunging previous names from those credit reports, at least when they are pulled for consumer things. You know, employers do not need to know it, landlords do not need to know this, and it only does more harm than good. And so being able to think beyond this mental model of “wanting to change your name means that you are a bad person” needs to happen.
We’ve talked a little bit together about things to do to bang the drum and create some real fixes to this. What are some of the things that you or Daylight are doing to create solutions for these problems?
I think one of the big ones for us—we see one of our roles, beside just creating new products for the LGBT community and to serve them better is to use our position in the financial industry to advocate for change inside companies. We’ve had great success until this point working with partners to take an audit of the various different ways that they almost unknowingly discriminate against their LGBT customers because of these mental models and ways of thinking and dealing with identity. So that’s a huge part of it.
We will be continuing to advocate for change, whether that is in working with individual entities, whether that is working at the governmental level, whether that is launching campaigns around these issues that is a huge part of it, and that is a huge part of it. And I think beyond that there are no immediate plans to launch any of our own products, but I think there is probably a world where we start to think about how do we launch a trans-inclusive credit product: how do we do that in a way that is not predatory or causing more financial harm than good but recognizing that, unfortunately, at the moment that at the moment in the U.S. that access to credit products is one of the ways that you establish yourself as an adult in the U.S. And, until that is no longer the case, how do we create products that make life easier for trans and nonbinary people?