You've finally got your home business as far as it will go, but you need a little more cash flow to sustain your buying trends and improve cash flow. You get your business plan typed up and to your satisfaction and make an appointment with your bank manager.

You don your best dress or your suit and tie, set out with your business plan and income projections to meet with your bank. After going over all the details, he finally leaves the room to conduct a credit check.
He discovers you defaulted on that credit card a few years ago when times were tough, or you were late on a few electricity bills over the past couple of years.

Credit declined, come back in a couple of years when the slate is wiped clean.

Of course your personal credit score affects your home business. Especially when you're hoping to expand and need to come up with funds, the quickest and easiest way is to borrow.

They don't consider the good credit you have displayed recently, while you are having more success. The big red warning bells ring for something you failed to pay on time all those years ago.

With credit, you're damned if you do and damned if you don't. In order to obtain a credit score an individual needs to borrow, whether it be for a personal vehicle or that credit card you were easily convinced in obtaining by your first live in boyfriend, who upped and left you with the bill. All red marks stay against your name.

A bank, franchise company or any other type of lender may find your credit score an indication of your inability to handle finances. Unfortunately, you will be judged on past late payments resulting in a poor credit score. If you have a poor credit score, a lender may lend you the money, but with higher costs involved. They can charge extra closing fees or other fine print costs involved when you are a little late.

There are numerous sites available on line for checking your personal credit score.

Someone who does not have a credit score will also be affected. If you have never borrowed funds before, how does the lender know you are reliable and a good financial risk? In this instance, try and have someone co-sign who does have a credit score that can help you obtain the funds.

When dealing with associates or other suppliers, in order to open an account they may need to check your past credit. Not only will they ask for other trading partners to obtain a reference, but will also need to know your credit history. This will advise them whether you are safe to trade with or not.

The best way to combat a bad credit score is prevention.

*Make all your payments on any bills, loans or credit card repayments, on time.

*Make over payments. This will also be beneficial in saving on interest.
*Look into government small business initiatives. Contact your local government and see if they have small business incentives that come in the form of start up loans and other monetary incentives.

*Look into using your capital, homes and vehicles or shares you may have when borrowing.

*If possible, try and find a guarantor or someone who has a higher credit rating than you to borrow funds.

Reading all of the above, it is evident that your credit score certainly can affect your home business.

Learn more about this author, R.L Hanlon.
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