If you have a low credit score, don’t let it stop you from applying for the surety bonds you need. Some surety providers, like ZipBonds, work with applicants with low credit scores by offering options that allow you to get bonded for a low premium rate.

In this article, we cover how credit scores generally impact bond rates and what your options are if you have less-than-ideal credit.

Can I get a surety bond with bad credit?

As we mentioned, getting a surety bond is possible if you have a low credit score. Sometimes it may be more challenging and require more information up front than if you had a higher credit score. In many cases, it can also be more expensive. A lower credit score can indicate to a surety company that an applicant is higher risk

To proceed with the bonding process, a surety may require additional collateral or charge a higher premium for the bond. However, not all surety companies have the same underwriting standards, and some may be willing to work with individuals with lower credit scores and even offer affordable options.

Bad Credit Surety Bond Programs

Not all surety providers are created the same. For example, you may get denied while applying for a license bond if you have a credit score lower than 650. However, even if you get denied when first applying for a bond, all is not lost. You may just need to find a provider that offers a “bad credit surety bond program.” 

  • This program gives applicants a better chance of getting approved. The cost of the premium will typically be higher in the first year. Then you can take the next year to work on building your credit score so that your bond premium goes down when it’s time to renew.

How does my credit score impact my ability to get bonded?

Your credit score is a number that lenders use to assess your creditworthiness. A higher credit score indicates that you are a lower-risk applicant. It also suggests that you can meet your financial obligations. You must be able to afford to pay out the total amount of your bond if someone files a claim against you. Therefore, a surety company is taking a higher risk when you have poor credit.

  • A high credit score, typically above 700, signals to surety underwriters that you have a solid financial track record. This makes it easier to get bonded, and you may also qualify for more competitive premium rates. 
  • Conversely, a low credit score, usually below 650, can raise concerns among underwriters and may result in higher premium rates (up to two or three times higher than those with good credit) or even a bond denial.

How do sureties run credit checks for bonds?

When you apply for a surety bond, the surety will request permission to access your credit history from one or more credit bureaus. They review your credit report to evaluate your payment history, outstanding debts, bankruptcies, and other relevant financial information. The surety will then use the data from the credit check to assess your creditworthiness and to set the premium rate for your bond.

Note: The credit pull is considered a soft pull for insurance purposes. That means it won’t impact your credit score, and in most cases, you will not even see that it has been pulled by the insurance company.

Do all bonds require credit pulls?

While credit checks are a common practice, not all surety bonds require them. Certain types of bonds, such as many license and permit bonds, have less stringent credit requirements or none at all. Some are simple to underwrite and are issued for a flat rate without a credit pull. Others, like fidelity and court bonds, may be issued based on the applicant’s character and reputation. 

How to Get a Surety Bond with Bad Credit

Here are some tips for getting a surety bond with a low credit score:

  • Contact a surety company specializing in working with people with low credit scores. 
  • Be prepared to provide documentation of your financial stability. This may include bank statements, tax returns, and proof of employment.
  • You may need to pay a higher premium to get your bond.

These strategies may also help increase your chances of obtaining a bond:

  • Consider a cosigner: A cosigner is someone with good credit willing to agree to be responsible for the bond if you default.
  • Provide collateral: Collateral is an asset that the surety company can take possession of if you default on the bond.
  • Provide strong business or personal references: A good track record of business relationships and personal references who can vouch for your reliability and trustworthiness can be valuable in bolstering your bond application.
  • Increase your credit score: If your bond application is denied, work on boosting your credit score for a while, and then re-apply.

Get Your Bad Credit Surety Bond Today

If you have bad credit, that doesn’t mean you can’t get the surety bond you need. There are options available to overcome bad credit and still pay a low premium. Some possibilities include providing financial statements or collateral. 

Some bonds don’t even require credit checks – so your low credit score may not affect your ability to get bonded or your premium rate. Don’t hesitate to call and speak with us about your concerns or to get a free quote before purchasing your bond.

Contact ZipBonds today!