Believe it or not, for centuries the most brilliant human minds spent more time pondering this question than they spent in pursuit of the natural sciences. And they articulated their different answers in very technical terms. 

Some have held that divine forgiveness of sins, and the declaration that one is righteous at the Final Judgment (justification), is entirely arbitrary and rests on God’s right to simply disregard or ignore man’s innumerable and egregious misdeeds. Others, often aware that no mere man can attain total perfection, hold that forgiveness at the Final Judgment must be dependent on whether one has made significant progress in becoming a “good person,” albeit after he has been empowered by divine grace to do so (and willingly cooperated with it), and had at least some of Christ’s own righteousness (and that of Mary and the Saints) credited to his account. The former view was contemplated by William of Ockham (1287–1347) and is advocated by many Muslims today. The latter view was held by Thomas Aquinas (1225–1274), and it is the position of many modern Roman Catholics.

In contrast to both, Martin Luther (1483 –1546) relentlessly proclaimed the biblical teaching that God forgives sinners finally and completely through faith in Jesus Christ. By faith alone, one’s sins are credited to Christ who bore them away by His death on the cross, and whose suffering was declared sufficient by his resurrection from the dead. By faith alone, Christ’s righteousness is credited to the one who believes in him and enjoys mystical union with him. 

In this way, God preserves his own perfect justice, neither disregarding the deserts of human sin nor the righteous requirements laid upon mankind in accordance with his own holiness. In this way, God shows himself to be utterly forgiving, setting believers free from eternal punishment on the basis of an objective, and all-sufficient ground, namely the infinite worth of Christ—his  life and death, vindicated in his resurrection. Moreover, the believer in Jesus may know in this life that he is already forgiven on the Last Day. He has passed through the final judgment, and eternal life has already begun. The forgiven sinner will love God’s commandments and labor to obey them, but this love for holiness is inspired by his prior, holistic forgiveness before God; a man’s love for holiness is never the reason why he is definitively forgiven. This constitutes the “Reformation Doctrine” of divine forgiveness, or more accurately of “justification.”

Nevertheless, both Roman Catholics and too many contemporary Protestants who have lost sight of the good news of the gospel, have critiqued the Reformation doctrine of forgiveness/justification on the ground that it makes for a “legal fiction,” where God forgives sinners arbitrarily (without reference to any corresponding reality) not unlike the Ockhamist scheme. In their estimation, a man’s own good deeds—his active attainment of at least some degree of moral virtue—must come to play in eliciting the divine declaration at the Final Judgment that the man is righteous. All of this is rather strange, for two reasons. First, on the Reformation view, God has a perfectly real and objective ground for forgiving and declaring sinners righteous, namely the righteousness of the eternal Son of God incarnate, Jesus Christ. 

Second, the Roman doctrine also holds that the righteousness of Christ (and others) is imputed or credited to believers, albeit in a partial and (in themselves) insufficient way. To this misplaced allegation, Reformed Theologian Michael Horton aptly responds thus:

While Ockham has no real basis for God to reward such actions [as the human wish to be good] with justification apart from his mere will, Luther holds that God’s justifying verdict is grounded entirely in the perfect obedience and satisfaction of Christ … For Luther, the remission of sins is not an arbitrary declaration; justification is a positive declaration that is based on the reality that Christ has fulfilled the covenant’s obligations and this status is imputed to the believer. Ockham’s view may indeed be characterized as a ‘legal fiction’ … However, Luther’s view is just as realistic as the Thomistic doctrine; Luther’s is that Christ’s righteousness imputed is the basis for God’s acceptance rather than created grace infused, along with the righteousness of Christ, Mary, the saints, and the believer herself imputed. How could one assert that the former is less real than the latter? … God is not free to save sinners simply by ignoring their wrongs. By locating this [the sinner’s] debt in God’s justice rather than simply his honor, the deepest possible connection was made between God’s decision to show mercy and the work of Christ as the only way of God’s being ‘just and the justifier of the one who has faith in Jesus’ (Rom. 3:26). The Christ-event is grounded not only in God’s will but in God’s being; once God freely determines to save sinners, he must do so in a way that satisfies his love and his righteousness.*

Thus, the Reformed doctrine of justification not only (a) harmonizes God’s attributes of love and justice; (b) exalts Jesus as the all-sufficient ground of justification; and (c) enables believers to be confident of their eternal salvation in this life; but (d) no critique can be leveled against it that can’t be leveled against the alternative theories. The Reformation Doctrine of Justification, based as it is on a faithful exposition of the Word of God, is truly the grandest truth that can be celebrated by fallen men.