When is tax returns needed for credit approval?

When the lender request the income tax return information you will need to have the copy of your past years income tax returns available for that purpose of applying for the loan and completing the loan process

A few of the major reasons is that if you haven't filed a return or understated your tax obligation - tax debts when discovered can take precedence over the lenders rights to collect, or to the property you are pledging.

Not filing returns can also be criminal. Criminals are bad credit candidates, for lots of obvious reasons.

If you haven't filed, or file showing a different amount than you are telling them, then you are a liar - doesn't matter to whom --- liars are bad credit candidates - (are you telling the truth that your going to repay, or is that another lie?)

There are many more reasons, and in todays world of required extra scruitiny of credit applications, all things will be looked at and compared to show you are the truthfull, responsible and entirely qualified person you want them to believe you are.