How to Get a Surety Bond with Bad Credit

How to Get a Surety Bond with Bad Credit
04/16/2020

If you’re wondering about a bad surety credit, it’s because you already know that the two are linked together. Surety bonds are a safeguard against fraud, which is why your credit score becomes a way for bond issuers to determine how much to charge for each surety. But there’s a silver lining here if you’re hoping to get bonded with low credit. Learn more about how your application is processed, and why some companies are willing to go the extra mile for their customers.

 

Surety Bonds and Credit Checks

It’s easy to think of a surety bond as a type of insurance in case of the worst-case scenario. But this type of bond is not the same as a policy. It was created as a way for the public to receive compensation should they find themselves a victim of fraud. If the bond value needs to be cashed in, it’s the bond company that initially pays the fees, but it’s you who will pay the surety bond company back in full. 

 

Why Does Bad Credit Make You High Risk?

A credit score doesn’t reveal anything definitive about a person, in that it’s merely a number that represents the person’s history. It cannot predict the future to a surety company about whether you’ll be unable to pay back the cost of the bond. 

However, a credit score is meant to be an indicator of how likely a person is to take care of important debts. If your credit score shows that you’ve had a difficult time keeping up with payments, it will be harder to secure surety bonds at the rates you want. Now is a great time to get a free quote, so you can get a better idea of how to budget for a surety bond. 

 

How Can ACS Help You If You Have Bad Credit (or No Credit)?

ACS does not believe that poor credit or no credit should stop people from fulfilling their business goals. And while you may not be able to secure the best rates due to your credit, that doesn’t mean it’s impossible to get a surety bond. We’ll look at the situation from every possible angle, so you have every chance of getting the bond you need to stay compliant. 

Typically, we only turn people down if they have some of the most extreme credit situations. Otherwise, if there’s a way to catch your business up to speed, we’ll make it happen. It’s our privilege to serve customers who are ready to take control of their finances through a combination of hard work and ingenuity. If your credit score is low, the company does take on greater financial risk than they would with a good or excellent credit individual. They balance out this risk by charging a higher premium for the bad credit auto dealer bond.

As you’re researching the average bond premium and how to get bonded in your state, keep in mind that some companies simply have more resources and flexibility when it comes to working with their customers. While other companies may have turned you down for bad credit, your perseverance might just pay off if you keep searching. 

 

What if I Can’t Afford the Quoted Rate?

With a surety bond, you pay a certain percentage of the required bond for your state. So if you were planning to open a company in New York and the bond amount was $20,000, you might pay just a few percent of the total if you had an excellent score. With a bad credit score though, you would be charged a higher premium to account for your high risk profile. 

If you can’t afford the quoted rate, the best thing to do is talk through the problem with the bond issuer. There may be an exception that could be made depending on everything from the type of bond you’re looking for to your projected financial earnings.

Having a conversation may not be the easiest thing in the world when you’re working with a poor credit score, but facing the problem head-on is the best way to explore all your options before giving up. 

 

Do You Need Good Credit to Get a Surety Bond?

No. Plenty of people are able to get bonds with poor credit. Again, there are no guarantees when it comes to your situation, but many of our customers are surprised at just how lenient ACS is when it comes to finding creative ways to get them their bonds.

ACS is committed to giving our customers accurate and trusted information, which is why we’re here to answer questions (or direct you to sources that can). So if you’re wondering “can you be bonded if you have bad credit?”, you should give yourself a break from the worry and get a free quote today.

 

What Credit Score Is Needed for Bonding?

Again the exact score needed for approval will depend on a variety of factors as ACS is willing to work with people from a variety of financial backgrounds. However, for the purposes of determining rates for the surety industry, a credit score of 750 or above is generally considered excellent, while 700 – 749 is considered above average.

If your credit is between 675 – 700, this is still considered good, with 650 – 674 seen as fair. Anything below 650 is considered non-standard, with a score under 549 labeled as poor. Your application may receive a more lengthy review process if your credit score falls into the subprime category of 650 and below. 

 

How Much Is a Surety Bond for $50,000?

The amount of a surety bond for $50,000 will be based on your credit score. Those with poor credit can expect to pay closer to double digits in terms of percentages, or around $5,000 or so. If your license is good for two years, you’ll be charged the amount of the surety bond in two annual premiums. This way, you can spread the payment out over time. 

Follow by Email
LinkedIn
LinkedIn
Share