What is redlining?

What is redlining?

• A. A method of color-coding stores across towns.
• B. Policies used by financial institutions to deny loans to applicants in particular areas, often affecting people of color.
• C. A street mapping system for zoning.
• D. A practice of red monthly fees.

Answer: (B)

Redlining is a discriminatory practice by banks and other lenders that denies or limits mortgages, loans, or insurance for people living in particular neighborhoods, typically based on race or ethnicity. In the mid-20th century, map color-coding identified areas deemed risky for investment, and red areas were effectively cut off from access to affordable credit. This meant residents—often people of color—had fewer opportunities to buy homes, build wealth, or refinance, which helped entrench segregation and economic disparities. The statement describes exactly this pattern: financial institutions denying loans to applicants in specific areas, with a disproportionate impact on people of color. Other options describe activities that aren’t about lending discrimination—color-coding stores, a zoning map system, or charging red monthly fees—so they don’t fit the idea of denying financial opportunities based on location and race.

Redlining is a discriminatory practice by banks and other lenders that denies or limits mortgages, loans, or insurance for people living in particular neighborhoods, typically based on race or ethnicity. In the mid-20th century, map color-coding identified areas deemed risky for investment, and red areas were effectively cut off from access to affordable credit. This meant residents—often people of color—had fewer opportunities to buy homes, build wealth, or refinance, which helped entrench segregation and economic disparities. The statement describes exactly this pattern: financial institutions denying loans to applicants in specific areas, with a disproportionate impact on people of color.

Other options describe activities that aren’t about lending discrimination—color-coding stores, a zoning map system, or charging red monthly fees—so they don’t fit the idea of denying financial opportunities based on location and race.