March is Credit Education Month, and at Citizens State Bank, we understand that credit plays a crucial role in agriculture. Whether you’re expanding your operation, upgrading equipment, or managing cash flow through the seasons, having a strong credit foundation can make all the difference. As your Ag banking partner, we want to help you understand how credit works and how to position yourself for long-term financial success.
Why Credit Matters in Agriculture
In farming, timing is everything—so is financial flexibility. Having access to credit can help you navigate challenges like fluctuating commodity prices, weather disruptions, or unexpected expenses. A strong credit profile can also lead to better loan terms, lower interest rates, and greater financial security for you and your operation.
Understanding Your Credit Score
Lenders look at your credit score to assess your ability to borrow and repay. The key factors that influence your score include:
✔ Payment History (35%) – Consistently making payments on time is the biggest factor in your score.
✔ Credit Utilization (30%) – Keeping balances manageable compared to your credit limits improves your score.
✔ Credit History Length (15%) – A longer credit history shows stability and responsible borrowing.
✔ New Credit (10%) – Opening multiple new accounts at once can temporarily lower your score.
✔ Credit Mix (10%) – Having a mix of credit types, such as operating loans, equipment financing, and a mortgage, can be beneficial.
Building & Maintaining Strong Credit as a Farmer
- Make payments on time. Whether it’s a land loan, equipment lease, or input financing, timely payments protect your score.
- Manage debt wisely. Using too much available credit can signal financial strain to lenders.
- Plan for seasonal fluctuations. Agriculture is cyclical—work with your banker to structure loans that align with your income cycles.
- Know where your credit stands. Making mindful credit decisions and knowing the details to your credit usage will prevent from your credit situation becoming out of control.
How We Can Help
Every farm operation is unique, and we take the time to understand yours. Whether you’re looking for financing options, working to improve your credit, or planning for long-term growth, we’re here to help. At Citizens State Bank, we specialize in Ag banking, and are committed to helping farmers, like you, build strong financial foundations.
If you have questions about credit, or need financing solutions tailored to your farm, stop by one of our branches, or give us a call. We’re proud to support our Ag customers and their success!
