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Which document is primarily used to determine a borrower's creditworthiness?
Credit report
Loan application
Property appraisal
Income statement
The correct answer is: Credit report
The document that is primarily used to determine a borrower's creditworthiness is the credit report. A credit report provides a comprehensive overview of a borrower's credit history, including their payment history, outstanding debts, credit utilization, and any public records such as bankruptcies or foreclosures. This information is crucial for lenders, as it helps them assess the risk associated with lending money to the borrower. A strong credit report, characterized by a good credit score and a history of timely payments, indicates that the borrower is likely to repay the loan responsibly, thereby affirming their creditworthiness. While the loan application does provide essential information about the borrower, such as their income and employment, it does not include the detailed credit history that a credit report offers. Similarly, a property appraisal evaluates the value of the property being financed, and an income statement provides insight into the borrower's income but does not directly reflect their credit behavior. Thus, the credit report stands out as the key document in assessing a borrower's ability to manage and repay debt.