Credit scores are the best predictor of how a homeowner will pay on a mortgage, so it's no surprise that credit scores will play a bigger role in mortgage financing in 2008.

Actually "that date" is more clearly defined.  It's March 1, 2008.

Beginning March 1, 2008, Fannie Mae and Freddie Mac will subject the bulk of their mortgage products to the interest rate adjustments when the loan-to-value exceeds 70%.

Credit scores will determine the amount of the rate adjustment.

• Credit scores between 660-679: 0.750% of loan size in fees
• Credit scores between 640-659: 1.250% of loan size in fees
• Credit scores between 620-639: 1.750% of loan size in fees
• Credit scores below 620: 2.000% of loan size in fees

For example, a person with a $250,000 mortgage rate would face a "credit-based fee" of $3,125 just because they carry a 650 credit score.  It would jump to $4,375 for a 635 credit score.

Alternatively, this fee can be "financed" into the mortgage instead of paid as cash.  The general rule is that for every 1.000% in fees, you can exchange it for a 0.250% increase to rate.  This is just a guideline, of course -- every mortgage lender has its own pricing scheme.

Because the credit score adjustment does not go into effect until March 1, 2008, there may still be time to be proactive if you think you'll trigger the rate increase.

If you are planning to purchase a home after the first of the New Year, it would be prudent to have your credit scores checked as soon as possible.  If your scores are below 680, or teetering on the edge, take ownership of your credit and start working to improve your score.

It is also important to note that this change in credit score requirements does not affect FHA or VA financing guidelines and may not affect state housing programs (it does not affect the program in New Hampshire, where I live).

A terrific source of non-biased credit scoring information is myFICO.com.

This post is reprinted from my regular blog.