What is the purpose of a borrower’s credit report in the mortgage application process?

The purpose of a borrower’s credit report in the mortgage application process is to assess the borrower's creditworthiness. A credit report provides lenders with a comprehensive overview of the borrower’s financial history, including their credit score, outstanding debts, payment history, and any public records such as bankruptcies or foreclosures. This information is crucial for lenders as it helps them evaluate how likely the borrower is to repay the loan. A strong credit history often results in better loan terms, as it indicates a lower risk for the lender.

Other aspects of the mortgage process do involve evaluating the property’s value or outlining the terms of the loan, but these functions are distinct from the information provided by the credit report. The credit report focuses specifically on the borrower's financial behavior and ability to manage credit, which directly influences the lender's decision-making concerning loan approval and interest rates.