Redlining

In the United States, redlining is the systematic denial of various services to residents of specific, often racially associated, neighborhoods or communities, either explicitly or through the selective raising of prices. While the best known examples of redlining have involved denial of financial services such as banking or insurance, other services such as health care or even supermarkets have been denied to residents. In the case of retail businesses like supermarkets, purposely locating stores impractically far away from targeted residents results in a redlining effect.

A 1936 HOLC "residential security" map of Philadelphia, classifying various neighborhoods by estimated riskiness of mortgage loans[1]

Reverse redlining occurs when a lender or insurer targets particular neighborhoods that are predominantly nonwhite or are being blockbusted, not to deny residents loans or insurance, but rather to charge them more than in a non-redlined neighborhood where there is more competition, or to only approve loans or insurance to nonwhite borrowers within specified loan areas to artificially restrict the supply of real estate available for loanable funds to nonwhites and charge them higher interest rates.[list 1]

In the 1960s, sociologist John McKnight coined the term "redlining" to describe the discriminatory practice of fencing off areas where banks would avoid investments based on the racial makeup of certain communities. During the heyday of redlining, the areas most frequently discriminated against were black inner city neighborhoods. For example, in Atlanta in the 1980s, a Pulitzer Prize-winning series of articles by investigative reporter Bill Dedman demonstrated how banks would often lend to lower-income whites but not to middle-income or upper-income blacks. The use of blacklists is a related mechanism also used by redliners to keep track of groups, areas, and people that the discriminating party feels should be denied business, aid, or other transactions. In academic literature, redlining falls under the broader category of credit rationing.