Redlining is best described as what practice?

• A. A method to increase interest rates
• B. A practice of denying loans based on location
• C. A type of appraisal method
• D. An ethical marketing practice

Answer: (B)

Redlining is about denying or restricting access to loans and other financial services based on where a person lives. Lenders would draw lines on maps around certain neighborhoods—often those with minority residents—and refuse or limit mortgage financing or insurance there, even if an individual borrower meets credit and income criteria. The key idea is that the decision is driven by geographic location rather than by the borrower’s finances or qualifications. This kind of practice harms homeowners in those areas and contributes to lasting inequities, and it’s illegal under fair housing and lending laws because loans must be evaluated on individual risk, not on location.

That’s why the description “a practice of denying loans based on location” best captures redlining. It isn’t about simply raising interest rates, nor is it about a method of property appraisal, and it certainly isn’t an ethical marketing practice—the core issue is discriminatory geographic-based denial of financing.