The legal declaration of us being righteous in His sight (justification) is to be distinguished with the gradual process by which God makes us righteous (sanctification). He not only erases our record of transgressions against Him, but also transforms us to live in accordance with His will.
"But God’s forgiveness of David’s sins [Romans 4:8, where Paul quotes Psalm 32:2] was not merely a legal declaration without some existential effect on David. To the contrary, David describes God’s forgiveness of his sins as being made “clean” and “whiter than snow” (51:7). And herein lies the key to God no longer reckoning David’s sin: the objective guilt of those sins had been removed. God’s reckoning was an evaluation that correctly corresponded to the objective reality of that which was being reckoned."
The forgiveness of sins enables us to overcome personal guilt and be at peace with God. Everything that surrounds justification is not to be conflated with justification itself. Forgiveness is an aspect of justification, but it does not make up its entirety.
"There are other passages that fit the same pattern. For example, in Romans 8:18 Paul “considers” [logizomai] that our current sufferings are not worth comparing with our glory that is to be revealed in heaven. Paul’s mental evaluation of our present sufferings compared to our glory in heaven matches the objective reality about the two. In Romans 9:8, Paul “reckons” [logizomai] Abraham’s spiritual children as God’s children. Paul’s evaluation about Abraham’s spiritual children corresponds to what they really are: God’s children."
Notice that in each of the above examples a reckoning according to reality takes place—a mental evaluation that correctly corresponds to reality. Never does the reckoning in these verses suggest a mere declaration that is not intended to match up to the reality. There are some passages in Scripture where people “reckon” something in a way that doesn’t match the true nature of the thing being reckoned (see Mark 15:28; Rom. 2:3). But in these cases the reckoning is seen as flawed."
The King James Version translates Strong's G3049 (logizomai) in the following manner: think (9x), impute (8x), reckon (6x), count (5x), account (4x), suppose (2x), reason (1x), number (1x), miscellaneous (5x). It has a slightly wide semantic range of meaning (For example: to reckon, count, compute, calculate).
The term logizomai has many instances in which something is accounted, reckoned, or regarded in a manner that corresponds with reality. But this accounting term does not always have to carry that meaning. This is the grounds for the Apostle Paul’s argument in Romans 4.
Interestingly, the form of logizomai that occurs in Romans 2:26 is an instance that can clearly be understood in a judicial or declarative sense. It would be absurd to assert that circumcision is infused into somebody. God treats a righteous man who is uncircumcised as if he is circumcised. 2 Timothy 4:16 also has a form of logizomai that can mean impute something on somebody’s behalf. So we can indeed interpret the Greek word in the sense of Christ’s righteousness being credited to our account.
"So, when we come to Romans 4:3, where God “reckons” Abraham as righteous, it’s reasonable to conclude, in light of the foregoing analysis, that God evaluates Abraham to be righteous because in reality his faith truly has a righteous quality to it, thus making Abraham ontologically righteous. To say that God “reckons” Abraham as righteous even though he’s not, you either have to say that God was wrong in his reckoning or that you’re using the term reckon in a way that Paul does not. No Protestant wants to concede the first horn of the dilemma. And I doubt that many want to concede the second. So, rather than undermining the Catholic view of justification, God’s reckoning of Abraham as righteous in Romans 4:3 supports it."
"of debt: it must be his due, as wages are to an hireling. Now this was not Abraham's case, which must have been, had he been justified by works; he had a reward reckoned to him, and accounted his, which was God himself, "I am thy shield, and exceeding, great reward", Genesis 15:1; which must be reckoned to him, not of debt, but of grace; wherefore it follows, that he was justified, not by works, but by the grace of God imputed to him; that which his faith believed in for righteousness. The distinction of a reward of grace, and of debt, was known to the Jews; a the one they called פרס, the other שכר: the formerF4 they say is הגמול, "a benefit", which is freely of grace bestowed on an undeserving person, or one he is not obliged to; the other is what is given, בדין, "of debt", in strict justice."
We are under no obligation to conclude that God was wrong to credit a righteous status to Abraham even though he was not. That conclusion does not logically follow. The Lord knows what is in our hearts. Believers are covered in the righteousness of Jesus Christ. His righteousness belongs to us. This "legal transaction" is not a lie just because it is a gift. This is not a matter of legal fiction. Christ is a real Mediator. Christ is truly our Advocate. He truly obeyed the Law perfectly. He paid the penalty for sin on our behalf. These points are all rooted in fact.