In which scenario may a borrower's credit report be required for loan approval?

A borrower's credit report is critical for determining loan eligibility and terms because it provides lenders with key information about the borrower's creditworthiness. This report shows the borrower's credit score, payment history, total debt, and other financial factors that assist lenders in assessing the risk involved in extending credit. Understanding a borrower’s financial history allows lenders to make informed decisions regarding the loan amount they can offer, the interest rate applicable, and the overall lending terms.

In contrast, the other options do not universally apply. For a low-interest rate, while a credit report may be considered, it is not the only determining factor; many other elements come into play. Suggesting that it is required for all types of mortgage refinancing overlooks scenarios where refinancing may not necessitate a full credit review, especially if certain conditions are met. Additionally, stating that credit reports are only required for government-backed loans misrepresents lending practices, as private loans and conventional loans also rely on credit reports irrespective of the loan type. Thus, option D directly aligns with standard lending practices regarding the evaluation of borrowers’ financial health.