If you're a sole proprietor or a business owner with fewer than 20 employees, your personal and business credit scores are closely linked in the eyes of banks and other potential lenders. So it's important to take steps to protect both--even if you don't plan on applying for a loan in the near future. A low credit score indicates you're a poor credit risk to potential lenders, and can limit the amount of credit they extend to you, result in higher interest rates or mean you're denied credit altogether. That's why it's important to monitor, evaluate and protect your credit standing just as you would protect any other business or personal assets.

To help you avoid any credit problems, here are some tips for managing your credit effectively:

• Get a business credit card as soon as you can after you start your business. This is a great opportunity to establish credit and will make you a more attractive candidate when you go to secure a business loan. But limit the number of cards you use and avoid using high-interest cash advances. When the bill arrives, pay the entire amount in full to avoid finance charges.
• Monitor your personal and business credit. Use a credit-monitoring service to monitor your credit, or regularly monitor your credit yourself, to ensure that no one's using your credit fraudulently. Open your credit statements as soon as they arrive in the mail and review them, or monitor your accounts online.
• Don't neglect your personal finances. As an individually owned business, your personal finances will be open to scrutiny by lenders. Don't pay your business expenses by ignoring car or personal credit card payments.
• Never back a business loan with a personal guarantee. Avoid loans or lines of credit that call for a personal guarantee. If you have to make a personal guarantee, consider it an investment in your business, don't expect to see return on that investment right away, and be ready to invest an equivalent amount of cash.
• Don't mortgage your house to fund your business. There's no such thing as a sure thing, including your new business. The last thing you want is to lose your business and your house.

Just a few tips.. feel free to add on..