The illegal and discriminatory practice of banks, insurance companies, and other financial institutions refusing to lend or do business in inner-city neighborhoods is known as:

• A. Redlining
• B. Blockbusting
• C. Predatory lending
• D. Gentrification

Answer: (A)

Redlining is the practice of denying or limiting financial services, including loans, in a particular neighborhood based on its racial or socioeconomic makeup rather than on an individual borrower’s qualifications. Historically, lenders marked maps with red lines around certain inner-city areas to indicate high risk, and then refused to lend there, which perpetuated disinvestment and segregation. This behavior is illegal under the Fair Housing Act and related credit laws because decisions are made based on where people live and who they are, not on individual qualifications. It’s distinct from blockbusting, which used fear to compel homeowners to sell cheaply; predatory lending, which involves unfair loan terms in any location; and gentrification, which refers to broader investment-driven neighborhood change that can displace residents but does not by itself describe the act of withholding loans from a neighborhood.