I’m in need of farm finance, but I don’t want to hurt my credit.  What happens to my credit if I submit an application for a farm loan?  Won’t my credit score go down?

Short answer:  Yes…  but not by much!

There is more to it than that, so we will dive in a bit further into the details of applying for a farm loan and its effects on your credit score.

When you go through a AFF finance application, you provide all the necessary information for our lending partner to evaluate your credit, income, assets, and liabilities.  Once you hit submit on your application, you are allowing our lending partner to evaluate your credit history.  They use this information to understand your risk and creditworthiness.  This is a hard credit check.  They want to know that you are a good applicant with a healthy debt-to-income ratio and a good history of repaying debt on time.

Hard credit checks lower credit scores by roughly five points or lower, but only for a short time.  And if you are applying for the same loan type at different lenders in a short window (typically 14 days), this usually would not be considered a hard check each time.  This is the act of “rate shopping” which is common to make sure you find the best lender and loan terms that suit your needs. 

On the bright side, having a farm loan that you can comfortably afford and manage will also help you build strong credit and increase your borrowing capacity so you can grow your farm operation in the future.  Just like growing corn or raising cattle, growing your farm business and your credit takes time, patience, and good stewardship of your resources.