Nigeria’s rice industry is supported by a number of policies with the ultimate goal of boosting its production to meet a growing demand. Among these policies, the agricultural credit guarantee scheme fund is one of the earliest policy directives implemented to encourage paddy producers’ access to formal credits from commercial banks. Considering decades-long debates on the effectiveness of credit policies in improving various aspects of agricultural production, the question is whether this policy has been effective in driving an expansion in paddy area in Nigeria. To answer this question, this study designed a model representing paddy area with the credit policy as one of the determining variables. Empirical results from an autoregressive distributive lag cointegration estimation technique suggests that Nigeria’s credit guarantee policy has a positive and statistically significant impact on paddy area. The finding, therefore, provide suggestions for sustaining the effectiveness of the agricultural credit policy in the country