Like the answer to any good question, it depends. The credit score you need for a farm loan depends on your lenders, your personal finance history, and other factors relating to your loan request. As a baseline, you should maintain a credit score of at least 660, though most ag lenders will question a credit score below 700.
However, there are exceptions. Government-sponsored FSA loans do not check credit scores upon application, so there is not necessarily a minimum requirement for FSA operating and ownership loans. They still expect loan applicants to have good loan repayment history with other lenders; they just don’t use a credit score to support that history.
If you are seeking financing with a traditional ag lender, like a community or national bank, or with a Farm Credit System institution, and you know your credit score is low, tell them early and provide justification for the score. Medical bills, divorce, or a short credit history are all justifiable reasons for a low score. Your score may automatically exclude you, or it may mean the lender processes your loan approval manually instead of through an automated system. A low credit score does not exclude you from farm loan financing, but it will slow down approval.
A good credit score will be necessary for a digital lender because of the automated systems and algorithms built into the credit model. They rely on credit score data and other data points to build a case for the loan and support the loan approval.
Ways to Improve Your Credit Score
If you have a less-than-ideal credit score, don't despair. Several steps can improve your creditworthiness and increase your chances of qualifying for a farm loan.
Pay all your bills on time and in full.
Reduce your outstanding debts by paying off high-interest credit cards or consolidating your debt into one lower-interest loan.
Limit your new credit accounts and regularly monitor your credit report for inaccuracies or identity theft.
Limit your credit usage to 30% or less of your available credit.
