Because a surety bond is a credit product, and not an insurance product, a person’s credit report is pulled and used to qualify them for a commercial surety bond.
Why Does Credit Matter?
Surety companies use credit history as a way to assess how you may handle a bond claim should it occur. If your credit score is low, an underwriter may feel that you have not been responsible with your financial obligations in the past. Since you will be held accountable for paying the claim on your bond, including legal fees, surety companies want to know you will pay them back if they ever have to pay out on a bond claim.
What is Considered Bad Credit?
A FICO score of 650 and below is considered to be bad credit, or non-standard. If your credit score is low, you can still obtain a bond. However, the conditions will be a lot more demanding.
How Do I Get Bonded with Bad Credit? First, you will need to apply for the bond. Once your application has been approved, an agent can let you know how much your bond premium will be. After you pay your premium and sign the contract, you will receive your bond. Just remember that if you have bad credit, your interest rate may be higher.
How Can I Lower My Premium?
In some cases, it is possible to lower your premium. Having substantial liquid assets, proof of cash verification, or strong personal and financial statements, can help with reducing your rate. Increasing your credit score may also contribute to lowering your premium, although that’s not always a guarantee.
If you have bad credit, or maybe just not enough credit history, finding a surety company that will bond you for a project can be challenging. At IOA Bonds, we specialize in working with those who may not be able to get a bond through the standard market. Contact us today by calling 1-866-379-3151 and let us help you get bonded despite your challenged credit.