Credit Where Credit is Due: Tips on Building Credit for Young Adults with Experiences of Homelessness

Apr 2023


One of the most needed, and overlooked, economic resources to support young people is inclusive information around financial literacy. In this blog, we will focus on the importance of building a credit score and tips for navigating financial institutions for young adults with lived experience of homelessness. Intersecting identities for young adults experiencing homelessness disproportionately include lesbian, gay, bisexual and transgender young people as well as black, indigenous and other people of color. 

In a 2018 Experian survey on LGBTQ+ finances, 62% of respondents reported experiencing financial challenges related to their sexual orientation or gender identity. Black and Latino consumers are more likely than white consumers to depend on high-interest financial services such as payday lenders and check-cashing counters because their neighborhoods have fewer banks, according to a Brookings Institution analysis. In theory, race should not affect credit scores. But due to current and historical discrimination from building wealth through traditional avenues such as homeownership, people of color – particularly Black and Latinx communities – tend to have lower credit scores. This can then further reinforce financial discrimination. In addition, housing programs are sometimes designed to prevent  people from having autonomy over their funds. Certain housing program models may further economically disenfranchise young adults by creating top-down, one-size-fits-all budgeting systems that remove their autonomy in determining their own spending priorities. This limits opportunities for trial-and-error that can inform financial strategies down the line. 

Credit plays a big role when it comes time to apply for your first apartment, buy a car, or get a cellphone or electric bill in your name. Your credit history may also determine whether you are asked to pay additional security deposits or fees on your accounts. Rent and cell phone bills are often not included in credit scores, but would likely make a meaningful difference for Black and Latinx communities, young adults, and other working class people in their ability to build credit. There are several ways you can start building a credit history as a young adult or while still in college. Some of the most common ways are:

  • Opening a credit card account with a low limit initially while you build your credit.
  • To build your credit, keep your balance low and make payments on time.
  • If you already have a cellphone, utility, or streaming service account in your name, you can sign up through some credit monitoring services to have those on-time payments added to your credit report.
  • Those 18 or older with an independent source of verifiable income can likely qualify for a credit card on their own. Alternatively, a caregiver or other adult relative can add a young person as an authorized user to help start the process of building credit. 
  • Another consideration for this community is to find affirming banks or credit unions that demonstrate their support for LGBTQ communities by using an online search engine or through word of mouth. For example, a bank may have policies that make it easier for transgender and nonbinary customers to use the name of their choice on their account profiles and credit cards. Inclusive policies help to reduce barriers to building credit. If you’re planning on beginning a gender transition, you can let your bank know ahead of time and ask if they have support in place to prevent any lack of continuity in service. 
  • In order to protect their identity and credit history, Experian provides a way for transgender and nonbinary consumers to update their name on their Experian credit report without losing any of their well-earned credit history. Additionally, Experian will suppress their birth name (also known as “dead name” or previous name) so it does not appear on their Experian credit report.

For more information informed by True Colors United work with the National Youth Forum on Homelessness and Experian, check out our Instagram