Know Your Credit Score Before Seeking a Home Business Loan

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Is 2015 the year that you become a home Internet business owner?

For some folks, the corporate world is just that, too corporate. Others, meantime, want the freedom and flexibility that comes with being their own boss.

With that said, the biggest hurdle to overcome in running your own business out of your residence can be finances.

Keep in mind that working for yourself in all likelihood means the end of a regular paycheck every two weeks or monthly (depending on the set up you’ve had or have with a corporate boss).

So, are you financially sound to take on a home business?

Credit Reports Are Key

For starters, what is your financial status as you set foot on opening a home Internet business?

If you have a decent savings account in place, are you willing/planning to tap into it to get your small business up and running? If your savings are minimal or non-existent, will you need a loan to kick things off?

In the event you find yourself in the latter category, you could work with a bank, credit union or other such financial institution to help you get the needed funds to open the business and market it.

One key factor to remember in such a scenario is that you will more than likely be the subject of a credit report.

Whether you get your credit score from CreditSesame.com or one of many other such providers, keep in mind the following:

• Depending on the credit report provider, you can obtain a free monthly credit score, 1-Bureau credit monitoring and alerts, and a free review of all your credit and loans;

• According to the Small Business Administration (SBA), nearly three-fourths of banks turn to small business owner credit scores when it comes to consider agreeing to a small business loan;

• In the event your credit score is not sufficient enough to meet the small business loan criteria, you can consider teaming up with a partner who has a better credit score than you. Whether that person is an official co-partner or just an investor in your home business, make sure you find someone who is willing to co-sign on the loan in order to acquire the necessary funds. If for some reason you default on the loan, the co-signer will be asked to pay it off;

• If your credit score is below what it needs to be to get a small business loan, work on improving it. Don’t open any other credit cards at the moment, pay more each month on the minimum required, and certainly don’t skip a payment. Whether intentional or by accident, missed payments can have major consequences on your credit score, none of which are good.

With all the positives that can come out of opening and running your own home small business, take credit when your credit report is where it should be from day one, especially if a small business loan request is on the horizon.

Photo credit: Image courtesy of Stuart Miles at FreeDigitalPhotos.net

About the Author: Dave Thomas writes for a variety of websites on topics such as marketing and small business.

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