What is redlining?

What is redlining?


It is the less ethical practice of denying, or increasing the cost of services, for specific group of people based on discriminatory factors, without taking their individual's creditworthiness into account.

The name comes from the red line that was drawn on a map around poor neighborhoods with a high concentration of minorities, in which financial institutions did not want to provide services because they considered the risk too high.

Nowadays, the term refers to discrimination against borrowers based on race, sex, incomes, etc. no matter the geography.

In 1977, the Federal Community Reinvestment act was ratified to stop redlining. Even though it is now against the law, discrimination still occurs.

Views: 3779        Posted on: May 21 2012        Tags: Definitions