The one thing you can do to slash your mortgage payments

If you're thinking of buying a home or refinancing one you already own, one of your top priorities should be to get the lowest mortgage interest rate possible. That's because the lower your interest rate, the lower your monthly payments - and the lower the total cost of your mortgage.

And probably the biggest factor in getting a low rate is your personal credit score, says Chris L. Boulter, president of Val-Chris Investments, Inc., a California company specializing in residential and commercial loans. "It's the first and most important thing lenders check when you apply for a mortgage," he says.

So, let's look first at how your credit score is determined, and then we'll share some expert advice on how to improve it.

Credit Score Basics

While you're more than just a number to your mortgage lender, your credit score number is probably the most important thing to them. Here's how your number is decided:

You actually have many credit scores from many different credit scoring companies. But, the one that almost all mortgage lenders use is your FICO score, says Ken Lin, CEO of CreditKarma.com, a website where consumers can access their credit scores for free.

Your FICO score ranges from 300 to 850, and the higher the better. This score is based on a number of factors, which FICO's website, MyFICO.com, breaks down by the percentage of how heavily each factor is weighed. They note, however, these percentages could change depending on a particular group you fit into, such as "people who have not been using credit long." But for the average consumer, here's the breakdown, straight from the source's site:

Your Credit Score and Your Mortgage

In a nutshell, all other things being equal, the higher your credit score, the lower your mortgage interest rate will be. And, says Boulter, for the best mortgage interest rates, you'll need a score of 760 or better. Further, to qualify for a mortgage at all, you'll want a score in the mid-600s, he says.

According to MyFICO.com, that's accurate. In fact, the site breaks it down even further, with a graph showing what mortgage interest rate you could qualify for with certain credit scores. Here's the graph for September 25, 2013, with an added category that shows what your monthly payment would be on a 30-year, fixed-rate mortgage of $300,000:

As you can see, your credit score can make a big difference in the monthly - and lifetime - costs of your home. The difference between a 639 score and a 760 score is hundreds of dollars a month and more than $100,000 over the life of your loan.

[Has your credit score increased recently? Click to compare mortgage interest rates from lenders now.]

So, let's explore some tips on how to raise your score.

Check Your Credit Report Annually for Errors

The first and biggest tip Lin offers is to check your credit annually. You have the right to one free credit report from each of the credit scoring companies every year, he says. These include Experian, Equifax, and TransUnion.

Lin says two shocking statistics are that 25 percent of credit reports have at least one meaningful error, and only about 35 percent of consumers check their credit report annually, according to CreditKarma's research.

"Those two numbers are serious, because you can't correct errors that might hurt your score if you don't know about them. So you've got to check your credit report at least once a year," he says.

Use Credit Wisely to Raise Your Score

Contrary to what you might believe, you are not born with good credit; you have to earn it, says Lin. And the only way to do that is to use credit. For most, he says, that means getting a few credit cards.

Lin says there a few important points here. The first is that, while you need to apply for credit cards to build your credit history, make sure you don't apply to too many at once.

"Too many credit applications over a short period of time will actually hurt your credit score because you have too many credit inquiries," he says.

He says that not only will your credit score take a hit with too many credit card applications, but mortgage lenders get nervous because they see you as possibly needing money. So he says to keep it to a few applications a year at most, building up to having three to five credit cards total.

But with that said, it's also important to remember to use your credit cards wisely. If you don't, you could get yourself into some serious financial trouble - as well as lower your credit score instead of raising it.

Keep Outstanding Balances at Less than 30 percent of Your Credit Limit

Let's face it: if you have three to five credit cards and your big screen TV breaks, you'll likely use credit to replace it before the big game. And that's fine, says Lin, as long as you don't go above a certain percentage of your available credit.

"What we see in our data is that 30 percent tends to be the tipping point when it starts to affect your credit score negatively. So, if you've got a $1,000 credit limit on your credit card and your balances are consistently lower than $300, you're generally safe," says Lin. A $10,000 limit means you can go to $3,000, and so on, he says.

Pay Your Credit Card on Time

Being late on your credit card payments can make a huge difference in your credit score. For example, your credit score drops with each delinquency, Lin says. That means if you're more than 90 days late on a payment, you'll get hit with a drop in your credit score when you're 30-days late, then again when you're 60-days late, and again when you're 90-days delinquent, etc., he says.

And if your credit score drops enough, you might not be able to qualify for a mortgage at all, Lin notes - not even one with a high interest rate.

To avoid this, he says it's imperative that you do all you can to make your payments on time. If you can't, call your creditors and ask for a payment plan or more time. The worst thing to do is ignore them and let them go delinquent. You're only harming yourself.

[Click to shop around and compare mortgage interest rates from multiple lenders now.]

Get No Annual Fee Credit Cards

Since one aspect of your credit score relies on the length of time you have been in good standing with your creditors, you don't want to cancel credit cards soon after you get them, says Lin.

That's why he suggests getting cards with no annual fee. "[A] card without any annual fee is one you're going to be able to hold onto for five, ten, fifteen years, and it becomes a good way of building your credit," he says.

And, if you pay your credit card balance off every month, you won't pay interest either.

"If you get a few no fee credit cards, [and] don't carry a balance by paying them off in full each month, you'll never have paid a penny in interest, and in three years you'll probably have a low 700 for a credit score. And that's what you need for a mortgage," he says.