Sometimes the credit scores for individuals and businesses can become damaged as a result of unfortunate circumstances that are virtually unavoidable, and it can leave you in a position where it’s nearly impossible to secure any type of credit or the type of bonding you need. Since various kinds of bonds are needed to start up a business, or to compete against other contractors in the market, getting the bonds you need to conduct business is essential.

You may have thought that your low credit score would prevent you from obtaining the bonds you need, but that’s not necessarily the case. Some surety companies are willing to issue bad credit bonds despite the fact that your business has a low credit score. It will usually cost more to obtain the bonds you need because you’re considered a higher credit risk, but if you find the right surety company, you can still get bonded in business.

Just how bad is your credit score?

As most people know, the credit score is a numeric representation of how creditworthy an individual or a business is considered. This score is strongly factored into any lender’s decision on whether to extend credit or loans because it is thought to be the best indicator of whether or not you will pay your debts. There are actually several different models of credit score, and each of these uses different guidelines in calculating the actual number which represents your credit score. The three most commonly used credit bureaus are TransUnion, Experian, and Equifax for individuals. And for businesses, the three most commonly consulted credit bureaus are Dun & Bradstreet, Equifax, and Experian.

Here is a breakdown of what is considered very good credit, all the way down to poor:

Getting a Surety Bond with Bad Credit

  • Exceptional – 800 or above
  • Very good – between 740 and 799
  • Good – between 670 and 739
  • Fair – between 580 and 669
  • Poor – 579 or below.

If your credit score is at 579 or below, you are considered to have very poor credit, and it will be very difficult to secure any kind of loan or credit extension from a company, although you may still be eligible for bad credit surety bonds. It’s also possible that you have no real credit history at all, because you haven’t been in business long enough to have accumulated transactions that provide the basis for creditworthiness, and in that case, you will generally be lumped into this same category of having poor credit.

Getting a surety bond with poor credit:

Applying for a poor credit surety bond is a fairly simple process, and it is not much different from the normal process. You will generally have to apply specifically under a poor credit program offered by a surety company, and that will alert the surety company to evaluate your actual creditworthiness and to calculate a monthly premium which would be fair, given the higher risk involved.

Your application has to be considered in the high-risk category because it is assumed that as an individual with poor credit, you are more likely to cause conditions that would trigger claims against the bond and that you are more likely to default on paying that claim out when one is made. These assumptions may indeed be entirely unfounded and inappropriate in your case, but they are legally supported, and will always come into play when your credit score falls below a certain threshold.

In any case, you will receive a quote for the premium which has been calculated, and you will then have the option of whether or not to accept that assessment. If you do, you will then only have to sign a contract, pay the first premium, and you will be issued the bond that you need. Assuming that you regularly make your premium payments, your bond program will remain in force for the entire agreed-upon period.

Where to apply for a bond

When looking to secure a bond, the best place to start is with NFP, the nation’s largest insurer and issuer of all kinds of bonds. Because we have access to a large number of insurance carriers and has a strong presence in literally dozens of markets, we can find a solution for virtually all bad-credit applicants, and acquire the bonds you need. It may cost a little more to get bonded with bad credit, but you can count on NFP to help you find what you’re looking for. Let us show you what it means to be bonded!