In underwriting, what is the purpose of a credit report?

• A. To verify the property's value.
• B. To verify the borrower's identity.
• C. To assess the borrower's credit history and repayment behavior.
• D. To determine the loan-to-value ratio.

Answer: (C)

In underwriting, the goal is to gauge how likely the borrower is to repay the loan based on past behavior. A credit report offers a record of the borrower’s credit history—including past and current debts, payment patterns, delinquencies, collections, and any bankruptcies or other marks. This information helps the underwriter judge creditworthiness and how the borrower has managed debt over time, which translates into the risk of default and future repayment behavior. It informs decisions about loan approval, pricing, and terms. It’s not about verifying property value, which is the job of an appraisal; it doesn’t serve as the primary tool for identity verification; and it doesn’t determine the loan-to-value ratio, which relies on property value and loan amount rather than credit history.