#232: Knowing Is Half the Battle (Friday, June 10)

The other day, someone mentioned the practice of redlining. I'd heard the term before and had a general sense of what it meant, but wanted to do some more research. The context of the discussion was that it was an old practice that happened in the pre-Civil Rights era, but as I read more, I realized that it's still happening today.

It seems crazy to me that I can be denied services or credit, or charged a higher interest rate just based upon my zip code, but that's pretty much what redlining is. And since I live in a predominantly black neighborhood, it means that a whole race of people are automatically lumped into the same category,  regardless of their individual credit  worthiness. Unfortunately, redlining is not just about financial services; it's also about food. I've often complained about the caliber of fruit in my neighborhood which is way different than say, the fruit in 10024. And it's probably no coincidence that there are more liquor stores, check cashing places and rent-to-own stores per square mile in my neighborhood than there are in 10019. All this because of zoning.


But what really blew me away, was reading a story about Kevin Johnson, whose Amex credit card limit was reduced by $7,000 because of where he shopped. Yes, where he shopped. The reason? "Other customers who have used their card at establishments where you recently shopped have a poor repayment history with American Express." Financially profiling aside, do you know the damage a $7k reduction in your limit can wreak on your credit score? And all because of where he shopped. The story is a couple years old, but the lesson is still important: knowing about the practices that could affect your finances is very important.

Kevin started a website based on his experience with is a WEALTH of information about credit developments. Check it out: www.newcreditrules.com