Redlining Redlining is an illegal practice. Redlining is the term for when a lender refuses to loan money or extend credit to a specific part of a city -- most often because of the concentration of a specific income level or ethnic group present in that location. For example: A bank draws up a map of a city and locates an area that is predominantly Hispanic. This bank then draws a red line around that district of the city. Anyone from that part of the city asking for a loan will have their loan denied on the basis of it being too high-risk. Redlining is an illegal practice because, while banks will justify it with risk analysis, it is almost always a process of targeted discrimination rather than statistical analysis. The practice of redlining is against the law, but some lenders are still accused of practicing it on rare occasions.