Transgender Americans face obstacles changing their digital identities

How your information shows up on a credit report can affect your ability to rent a home, get a mortgage or take out a loan. So you want to make sure that information is accurate, especially after a name change.

But that can be a particular challenge for transgender and nonbinary people who change their name to better align it with their identity. Last month, the Consumer Data Industry Association, which includes the major credit bureaus, issued recommendations for how those consumers can update their credit reports.

But a group of 145 organizations says the industry needs to do more.

Spencer Watson is president of one of those groups, the Center for LGBTQ Economic Advancement and Research, or CLEAR. They explained where the process breaks down for people. The following is an edited transcript of our conversation.

Spencer Watson: When they changed their first names, the credit bureaus are unable to find them in their systems and often create a new credit file in their new name instead of matching it with their old credit information. And so, they end up losing their credit history in many cases and having multiple credit files with the bureaus that then they have to be able to reconcile in some way. When they reach out to the bureaus to fix those fragmented credit files, they can also have difficulties working with the bureaus because they have not previously had policies in place to assist those customers in being able to reconcile their accounts. After even going through a lengthy process of working with the bureaus to merge those two files, and also having to contact the previous creditors and correct the name on file with those creditors as well, they can also continue to have difficulties because their previous name or dead name continues to appear on the credit file, as well as their aliases and previously known names. And so, that can out them to people who use credit files to evaluate them for jobs, for housing or for credit and insurance.

Kimberly Adams: That’s such an important point because lots of places pull information from the credit bureaus and their databases. How does this information end up showing up in the rest of folks’ lives?

Watson: So yeah. Credit reports and credit histories are used in all sorts of different contexts — employment, housing, credit and insurance. And there are specialty consumer reporting agencies that create employee background checks, as well as housing background checks, and they pull their information from the credit bureaus. So, if the information is incorrect at the bureau, that can also lead to inaccuracies at these specialty reporting agencies as well and also lead to the disclosure of previous names, dead names, to folks who are evaluating trans [consumers] for necessary services, goods and jobs.

Adams: Why is it harder to change a first name than, say, a last name because people change their names for marriage or adoption all the time?

Watson: The credit bureau systems were designed with a certain understanding that people do change their last names and to bring that credit history with their new last name. But the bureaus and their matching algorithms end up using the first name as a piece of matching information in order to bring the credit history into the correct credit file. And so, when the first name has changed, that really does create problems.

Adams: This algorithm that you mentioned, it also helps generate credit scores. How do these errors persisting affect people’s financial lives?

Watson: There can then be denials for credit or housing or employment because of a lack of credit information, because that credit history is not in the credit file. In cases where folks are having a huge drop in score because of the positive history that they’ve lost, it can lead to unfair denials because of an inaccurate score that is being created from an inaccurate picture of that person’s credit history.

Adams: The Consumer Data Industry Association recommends that trans and nonbinary consumers contact each of the major credit bureaus to work out their credit report name change, but what other solutions could help here?

Watson: In addition to contacting the credit bureaus themselves, each of the credit bureaus in the policies that they have released have explained to consumers that they still do have to go back and contact their previous creditors to inform them of their name change — in order to avoid the occurrence or recurrence of a fragmented credit file. There is then a need for folks who are undergoing name changes to realize that that is a step, that at least at present that they do have to take to avoid this issue. I would note that errors and inaccuracies and mistakes on credit reports are widely felt across the consumers of the United States. And they frequently do have difficulties working with credit bureaus in order to resolve inaccuracies or mistakes because of shoddy processes at the bureaus where consumers are struggling to provide the correct documentation, because maybe they were given inaccurate advice by a customer representative or documents that they send are lost and then have to be re-sent or sometimes sent by fax or mail. And these are sometimes things that people can struggle to access. So trans and nonbinary consumers should be diligent in their requests to the bureaus and understand that the frustrations that they experience are not frustrations that they’re experiencing alone.

Adams: Is the industry doing enough, in your opinion?

Watson: I think the industry has taken a good first step to facilitate name changes. I do think that they can undertake steps, such as using the full nine digits of the Social Security number, to match credit information with the correct credit file as well as modifying their algorithms to be less reliant upon the first name, so that the fragmented file doesn’t occur in the first place.

Adams: So assuming that someone goes through all the process and all of the steps to get their name changed on their credit report, is that enough?

Watson: Well, sometimes these fragmented files recur. That is because even after folks have gone to the credit bureaus and gotten the name changed on their credit report, when credit information is provided by banks or creditors who furnish information to the credit bureaus, that when there’s again an inconsistency in that information being furnished, then the file can be fragmented again.

Related links: More insight from Kimberly Adams

We have a link to that letter Spencer’s group co-signed.

We also have a link to the CDIA’s announcement of its efforts to help transgender and nonbinary customers update their credit files. The group points out that while notifying banks and creditors is usually enough for a last-name change, a first- or middle-name change will probably take additional steps, potentially including submitting additional documents to the credit bureaus.

The website HR Dive has a story about some of the unique challenges transgender employees face in the workplace, including when some employers review credit reports for jobs that require handling corporate finances, credit reports that may still be under the person’s former or dead name.