What are "redlining" practices in lending?

Redlining refers to discriminatory practices in lending where banks or financial institutions systematically refuse to provide loans or insurance to residents of specific geographic areas based on the racial or ethnic demographics of those communities. This practice often leads to a lack of investment in certain neighborhoods, perpetuating cycles of poverty and economic disadvantage.

The term "redlining" originated from the practice of using red ink to outline areas on maps where banks were unwilling to lend, thereby visually representing the exclusion of these neighborhoods from access to financial services. This systemic form of discrimination has been widely recognized as a violation of fair lending laws and has been the focus of various policies aimed at creating equity in access to credit.

Understanding the implications of redlining is crucial for addressing the historical injustices faced by marginalized communities and promoting fair lending practices that enable equal opportunities for all individuals, regardless of where they live.