The effectiveness of agricultural credit in promoting productivity and rural development depends not only on farmers’ access to finance but also on their ability to manage financial resources efficiently. This study examined the relationship between financial literacy and credit utilization among rural farmers in Delta State, Nigeria. A multistage sampling procedure was used to select 312 farmers from twelve rural communities. Primary data were collected using a structured questionnaire, while descriptive statistics, the Financial Literacy Index (FLI), Loan Utilization Index (LUI), and multiple regression analysis were employed for data analysis. The findings revealed a moderate level of financial literacy (FLI = 0.70), with relatively stronger performance in credit management and budgeting than in record-keeping practices. Cooperative societies and microfinance banks emerged as the dominant sources of agricultural credit among respondents. The results further indicated a high level of loan utilization (LUI = 0.76), suggesting that most farmers allocated borrowed funds to productive agricultural activities. Regression analysis confirmed that financial literacy and educational attainment significantly influenced credit utilization behaviour. The study concludes that financial literacy and education are crucial determinants of effective agricultural credit utilization. Enhancing farmers’ financial knowledge and educational capacity can enhance loan utilization efficiency and improve farm performance. The findings provide important policy implications for strengthening financial capability and improving agricultural finance outcomes in rural development contexts.