Credit Services Organization Bond
What is a credit services organization bond?
In many states, credit services organizations must post a surety bond to become licensed. The bond offers credit service buyers protection from financial harm due to unethical business practices. The bond ensures that credit service organizations follow state laws and regulations for their industry.
This bond goes by various names, depending on your state:
- Credit repair service bonds
- Debt management services provider bonds
- CSO bonds
- Debt negotiator bonds
What is a credit services organization?
A credit services organization (CSO) is any business that sells, advertises, performs, or provides any of the following services, according to the Ohio Attorney General:
- Improves a buyer’s credit history or rating
- Obtains an extension of credit for a buyer
- Offers assistance or advice concerning improving or obtaining credit
- Removes negative information from a buyer’s credit record
Get Your CSO Bond:
Quick Takeaways
- In many states, CSOs must post a surety bond to become licensed.
- This bond provides credit service buyers protection from financial harm due to unethical business practices.
- You may need a separate bond for each state or location in which you work.
- The bonding requirement for your state may range anywhere from $10,000 to $100,000.
How do credit service organization bonds work?
In most states, CSOs must post a surety bond before they can become licensed. A credit service organization bond is a contract between three parties:
- Principal: CSO
- Obligee: Federal or state regulatory agency that requires the bond
- Surety: Financial Company that underwrites and issues the bond
The bond helps guarantee that the CSO performs its duties ethically and legally. It protects both the business’s clients and the state from financial loss due to unlawful behavior. If a client loses money because a CSO commits fraud or offers misleading advice, for example, the client may file a claim against the bond.
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If the surety company investigates the claim and deems it valid, they may pay the client for the damages – up to the total bond amount. The CSO will then be required to pay the surety back for the same amount.
Who needs a CSO bond?
Read each state’s specific bonding requirements below.
Florida Credit Services Organization Bond
The Florida Department of Financial Services requires CSOs in Florida to post a $10,000 surety bond. This bond protects the interests of a CSO’s customers and the government.
Iowa Credit Services Organization Bond
The Iowa Secretary of State requires CSOs to secure and maintain a $10,000 surety bond (or surety account).
Illinois Credit Services Organization Bond
The Illinois Secretary of State requires CSOs to file a $100,000 surety bond.
Maine Loan Broker Bond
According to the Bureau of Consumer Credit Protection, before obtaining a license to run a CSO in Maine, you must purchase a $25,000 surety bond for each branch location.
Minnesota Credit Services Organization Bond
Before you can obtain a license to run a CSO in Minnesota, you must purchase a $10,000 surety bond, according to the Minnesota Statutes.
Ohio Credit Services Organization Bond
The Ohio Credit Services Organization Act requires a license to run a CSO in Ohio, along with a $50,000 surety bond.
Oklahoma Credit Services Organization Bond
According to the Department of Consumer Credit, prospective CSOs in Oklahoma must purchase a $10,000 surety bond.
Oregon Debt Management Service Provider Bond
According to the Department of Consumer and Business Services, before obtaining a license to become a debt management service provider in Oregon, you must purchase a $25,000 surety bond.
Pennsylvania Credit Services Organization Bond
According to the Credit Services Act, your surety bond must equal 5% of the total fees you charged buyers the previous year. The amount could be anywhere between $5,000 and $25,000. You can adjust your bond annually as your fees change.
Texas Credit Services Organization Bond
The Texas Secretary of State requires all CSOs in the state to be bonded and licensed. The bond requirement is $10,000.
West Virginia Credit Services Organization Bond
The West Virginia Code requires CSOs to post a $15,000 surety bond to become registered with the state.
Wisconsin Credit Services Organization Bond
Before obtaining a license to run a CSO in Wisconsin, you must purchase a $25,000 surety bond, according to the Wisconsin Statutes.
Frequently Asked Questions
How much does a credit service organization bond cost?
The cost of your bond will depend on a few different factors: your state requirements, your credit score, and your business’s financial strength. If you have substantial financial backing and good credit, you could pay as little as 1-3% of the bond amount. With poor credit, you may pay more – up to 15% in some cases.
Do you need a surety bond for your credit repair business in multiple states or locations?
Licensing and bonding stipulations can vary by state. To comply with each location’s licensing regulations, be sure to check on the specific requirements. You may need a separate bond for each state or area in which you work.
Get a Credit Services Organization Bond in Your State
We can help you find the right surety bond for your credit repair business. ZipBonds offers the fastest and most secure option for acquiring license and permit bonds. Our all-digital platform is intuitive and straightforward. Apply online or call us at (888) 435-4191 to speak with an agent directly.
About ZipBonds.com
Founders Ryan Swalve and Zach Mefferd formed the vision for ZipBonds.com when they realized how overly complicated it was to help clients place surety. The frustration of being unable to incorporate the technology they’d used in other insurance-focused projects left them thinking “there has to be a better way.”
Fast forward a couple of years, and that better way is the impetus of everything we do at ZipBonds. We constantly look for innovative ways to improve the bonding process for our clients and agents. Our team comprises individuals who understand all angles of surety – for companies, agencies, and individuals. Incorporating everyone’s point of view to improve the process while simultaneously integrating cutting-edge technology is what sets our business apart.