The practice of not lending money to applicants based on location is known as what?

The practice of not lending money to applicants based on location is known as redlining. This term refers to the systematic denial of various services, including financial services such as loans and mortgages, to residents in certain neighborhoods, often based on racial or economic characteristics.

Redlining emerged from discriminatory practices and policies that identified areas, frequently predominately inhabited by minorities or lower-income residents, as high-risk for lending. This led to a lack of investment and resources in those communities, perpetuating cycles of poverty and disinvestment.

In contrast, steering pertains to directing potential homebuyers toward or away from specific neighborhoods based on their race or ethnicity, which does not directly relate to lending practices. Fair lending is a concept aimed at promoting equitable access to credit and preventing discrimination in lending, making it more about compliance and advocacy against practices like redlining. Discrimination in a broader sense encompasses various unfair practices, but specifically identifying the lending issue based on location is accurately described as redlining. This distinction is essential in understanding the implications of financial discrimination and its impact on communities.