Farm loan programs: Maintaining good credit history

Farm Service Agency Farm Loan programs require that applicants have a satisfactory credit history. A credit report is requested for all FSA direct farm loan applicants. These reports are reviewed to verify outstanding debts, if bills are paid timely and to determine the impact on cash flow.

Information found on a customer’s credit report is strictly confidential and is used only as an aid in conducting FSA business.  Our farm loan staff will discuss options with you if you have an unfavorable credit report and will provide a copy of your report. If you dispute the accuracy of the information on the credit report, it is up to you to contact the issuing credit report company to resolve any errors or inaccuracies.

There are multiple ways to remedy an unfavorable credit score.

  • Make sure to pay bills on time. Setting up automatic payments or automated reminders can be an effective way to remember payment due dates.
  • Pay down existing debt.
  • Keep your credit card balances low.
  • Avoid suddenly opening or closing existing credit accounts. FSA’s farm loan staff will guide you through the process, which may require you to reapply for a loan after improving or correcting your credit report. For more information on FSA farm loan programs, visit www.fsa.usda.gov.

Supervised Credit

Farm Service Agency Farm Loan programs are considered supervised credit. Unlike loans from a commercial lender, FSA loans are intended to be temporary in nature. Therefore, it is our goal to help you graduate to commercial credit, and our farm loan staff is available to help borrowers through training and credit counseling. The FSA team will help borrowers identify their goals to ensure financial success. Through this process, FSA staff will advise borrowers in developing strategies and a plan to meet your operation’s goals and graduate to commercial credit. Ultimately, the borrower is responsible for the success of the farming operation, but FSA’s staff will help in an advisory role to provide the tools necessary to help you achieve your operational goals and manage your finances. For more information on FSA farm loan programs, visitwww.fsa.usda.gov.

Communication is Key in Lending

Farm Service Agency (FSA) is committed to providing our farm loan borrowers the tools necessary to be a success. A part of ensuring this success is providing guidance and counsel from the loan application process through the borrower’s graduation to commercial lending institutions. While it is FSA’s commitment to advise borrowers as they identify goals and evaluate progress, it is crucial for borrowers to communicate with their farm loan staff when changes occur. It is the borrower’s responsibility to alert FSA to any of the following:

  • Any proposed or significant changes in the farming operation;
  • Any significant changes to family income or expenses;
  • The development of problem situations;
  • Any losses or proposed significant changes in security In addition, if a farm loan borrower cannot make payments to suppliers, other creditors, or FSA on time, contact your farm loan staff immediately to discuss loan servicing options.

Preauthorized Debit Available for Farm Loan Borrowers

USDA Farm Service Agency has implemented pre-authorized debit for Farm Loan Program borrowers. PAD is a voluntary and alternative method for making weekly, bi-weekly, monthly, quarterly, semi-annual or annual payments on loans.

PAD payments are preauthorized transactions that allow the National Financial and Accounting Operations Center to electronically collect loan payments from a customer’s account at a financial institution.

PAD may be useful for borrowers who use nonfarm income from regular wages or salary to make payments on loans or adjustment offers or for payments from seasonal produce stands. PAD can only be established for future payments.

For more information on FSA farm loan programs, visit www.fsa.usda.gov.

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