Pride is intersectional & so is the future of lending

Zest AI team
June 18, 2024

This pride month, we want to take a moment to champion diversity and celebrate all of the facets of ourselves that make us unique

Gender, age, race, and sexual orientation are just a few of the elements that create the collage of our identities. Like a mosaic, each of these building blocks work together to inform our individual stories. 

Queer people are no strangers to intersectionality — POC are more likely to identify as LGBTQIA+ and same sex couples are two times more likely to be in an interracial relationship. In the lending space, understanding intersectionality is at the heart of serving more people and building better ramps to the American Dream. Yet, the current lending system often penalizes folks for their intersectionality instead of lifting them up. 

​​Did you know: over one-third of female LGBTQIA+ consumers applying for credit have been turned down in the last 12 months?

Gabriela needs a little extra cash to pay her utilities this month. She is one of many queer women who is currently unbanked because she doesn’t have enough savings to meet the minimum required balance, so she uses her local payday lender to obtain a short-term loan. 

Gabriela is not alone, as people who identify as female and LGBTQIA+ are 1.3 times more likely to be unbanked or underbanked and are 1.2 times more likely to use Alternative Financial Services (like a payday lender), according to a report by LGBTQ Economics. As a credit-invisible applicant, she is more likely to be turned away when applying for credit through a traditional lender.

Gabriela is also Hispanic, meaning she is nearly nearly three times more likely to be turned down compared to her straight, white counterparts. This intersection of gender, race, and sexual orientation may prohibit her from breaking into the financial mainstream. This also impacts her ability to land her dream job because employers check credit reports. And if she does get the job, her ability to secure an auto loan for her commute may also be at risk. When it comes to larger purchases, her intersectional identity should not hinder her ability to live a better, richer, fuller life. 

Did you know: homeownership rates are significantly lower for LGBTQIA+ folks compared to straight and cisgender individuals?

Meet Jessica, a young Black woman looking to buy her first home with her girlfriend. She holds a degree and has worked hard in the first stretch of her career in order to save for a starter home. She’s also prioritizing looking for a desirable school district, so she can eventually raise a family in a safe environment and create generational wealth for her family. As LGBTQIA+ and Black, Jessica is doubly disadvantaged. 

Compared to White, cisgender Americans, Black Americans who identify as LGBTQIA+ are 55 percent less likely to own a home, according to the Urban Institute. This intersection of race and sexual orientation points to the intricate web of systemic discrimination and inequality that these folks face. 

And while Jessica is more likely to live in a city with more inclusive policies, these cities also happen to have a much higher cost of living. How can Jessica create opportunities for her future children when she herself is on the wrong side of a systemically biased system? It takes the change of a system and support of allies to move towards a world where everyone can participate equally in the economy.

Did you know: transgender people have a rate of poverty of nearly 30 percent?

For Will, who has recently transitioned, broadening access means acknowledging the challenges of being transgender layered on top of the challenges of being Native American. It means understanding that as a Native American, not only is Will likely to be underrepresented in mortgage lending by a factor of three, but he is also likely to experience fragmented credit reports due to a name change. This shouldn’t be the start of a struggle for Will, but the opportunity for a new, fuller life for him. There’s a way for everyone to get a fair shot at building a better life and that is through recognizing our differences and building a system that incorporates everyone. 

Broadening access means embracing intersectionality

At Zest AI, we’re on a mission to broaden access to equitable lending, and we strive to understand and address the interconnected experiences that enrich the fabric of our communities. A one-size-fits all solution falls short in a diverse society and concentrating solely on individual puzzle pieces prevents us from recognizing the complete picture they collectively form. We're committed to allyship through financial equity and innovation that serves every American. 

Zest AI wants to recognize the contributions of our intern Isabel Taulli for offering her insights to our site — thank you!

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