Farm Raised Family | Financial Planning Series – Article 10
Credit scores might seem like something only bankers or city folks worry about, but the truth is—your credit score affects everything from buying a truck to refinancing your home to expanding your farm.
Good credit can save you tens of thousands over your lifetime. Bad credit? It can cost you much more than just higher interest rates.
Let’s break it down into plain language and simple action steps.
🧮 What are Credit Scores?
A credit score is a number (usually between 300 and 850) that represents your financial trustworthiness. The higher the number, the better you look to lenders.
Most commonly, it’s your FICO score, and it’s based on five factors:
| Factor | Weight | What It Means |
|---|---|---|
| Payment History | 35% | Do you pay your bills on time? |
| Credit Utilization | 30% | How much of your credit limit are you using? |
| Length of Credit History | 15% | How long have your accounts been open? |
| Credit Mix | 10% | Do you use a variety of credit types? |
| New Credit/Inquiries | 10% | Have you opened many accounts recently? |
🧭 Credit Scores – Why It Matters for Families
- Lower interest rates = major savings on mortgages, vehicles, and loans
- Easier approvals for financing big purchases
- Better insurance premiums, rental options, and even some job opportunities
- Access to emergency lines of credit when times get tough
🛠️ How to Build or Improve Your Credit Scores
1. Pay Bills On Time—Every Time
Set up reminders or auto-pay for credit cards, loans, and utilities. Even one late payment can hurt.
2. Keep Balances Low
Try to keep credit card use under 30% of the limit (10% is ideal). If your limit is $1,000, aim to use less than $300 at a time.
3. Don’t Close Old Accounts
Even if you’re not using them, older accounts help build your credit history.
4. Limit New Applications
Too many hard credit pulls in a short time can lower your score.
5. Use Credit Responsibly
If you’re starting from scratch, consider:
- A secured credit card
- A credit-builder loan
- Becoming an authorized user on a trusted relative’s card
📉 Avoid These Common Credit Pitfalls
- Maxing out cards
- Co-signing loans you can’t afford to cover
- Ignoring collections or old debts
- Opening store cards you don’t need just for the discount
🔍 How to Check Credit Scores (for Free)
- AnnualCreditReport.com: Get a free report from each of the three bureaus once per year
- Use free tools like Credit Karma, Credit Sesame, or your bank’s mobile app
Note: Free services show estimated scores—not your official FICO, but close enough to track progress.
💡 Farm Family Tip:
If you ever plan to buy land, upgrade machinery, or expand operations—your credit score could make or break the loan deal. Plan ahead by maintaining strong credit even when you’re not actively borrowing.
🎯 Final Thoughts
Credit scores are like a financial reputation. You may not think about it every day—but it’s working in the background, shaping your family’s opportunities. With a little care and a few smart habits, your score can open doors, save you money, and support your long-term goals.
We have multiple new series starting now to give you the best in information concerning financial matters for families. Join our community so that you never miss anything, plus get some great exclusive insight!
✍️ Up Next:
“Teaching Kids About Money on the Farm”
Let’s talk about how to raise financially savvy kids—using everyday farm life as your classroom.
MORE WAYS TO CONNECT
We also, as a homesteading family, have a variety of blogs that might interest you. A Life on the Farm focuses on the more personal side of the homesteading life. We discuss subjects like family, parenting, relationships, homeschooling, cooking, canning and so much more.
Two Oaks Farm Talk concerns the more technical side of homesteading. We discuss subjects like gardening, food prep, and farm building and construction with lots of tutorials!
Farm Raised Family is basically a hub for everything under the Two Oaks Farmstead umbrella. You can learn a great deal about all parts of the farmstead there. The Farm Raised Family blog focuses on financial matters such as budgeting, saving, and more and on current events affecting families.
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