Credit score is one of the main items that surety bond companies look at when considering bond applications. A bond applicant with good credit is deemed "low risk" and often approved. However, the reality is that many people don't have high credit or, in some cases, any credit. This may be for various reasons, including student loans, high credit card balances, medical bills, late payment history, bankruptcy, etc.
Thankfully, having bad credit doesn't necessarily mean you can't get your bond needs met, though. Here is what you need to know.
How to Get a Surety Bond with Bad Credit
Whether you can get bonds with bad credit will depend on the bond type you need and the severity of your credit issues. You can determine if you truly have bad personal credit by reading this guide. You can also pull a soft credit report from the websites of the major credit bureaus to see your credit score.
It's also important to understand how bonds work and that you're responsible for paying bond claims. If you have credit issues, a surety company will view you as a higher risk—more likely to cause and not pay claims—which is why the term "high risk surety bonds" is sometimes used.
You can read our guide to learn how to get bonded and insured.
How to Apply for a Bad Credit Surety Bond?
You can apply for a bad credit surety bond just like you would any other bond when it comes to court bonds, license bonds, and permit bonds.
To get a free quote or an instant estimate, you will need basic information such as your name, phone number, email, and required bond amount. An instant estimate also requires you to know the type of bond you need.
Contract bonds are a little trickier and may require the SBA program if you are a small contractor with bad credit.
You will find more information on each type of surety bond below.
Getting License & Permit Bonds with Bad Credit
You will be able to get approved for most license bonds and permit bonds even with credit issues. Examples of these include motor vehicle dealer bonds and contractor license bonds. There are multiple ways to get started:
- You can apply online to get a firm quote. Or, if you're just doing research, you can use our surety bond premium calculator tool to get an instant estimate.
- Learn more about surety bond costs and how they are determined by reading our comprehensive pricing guide.
- Lastly, you can also select your state from the list below to view all of its bond requirements.
Can you Get Contract Bonds with Bad Credit?
It's possible to get construction bonds for jobs such as bid bonds and performance bonds with bad credit. However, if you're a small business or independent contractor with severe credit issues, you won't be able to get bonded through standard markets—you'll need to use the SBA program. Keep in mind, you'll be limited to smaller contracts. If you're a larger contractor with poor credit, you can obtain contract bonds by providing strong CPA-prepared business financials.
Fill out our online application to see if you qualify for contract bonding.
Getting Court Bonds with Credit Issues
Depending on the circumstances surrounding the case or estate, it's possible to get court bonds with bad credit. However, your credit issues can't be severe. Items such as large collections, tax liens, or civil judgments will prevent you from getting court bonds. You can apply online to determine if you're able to obtain a court bond.
Do Surety Bonds Require a Credit Check?
Yes, a bond agency will run a credit check once they receive your surety bond application as part of their underwriting process. After all, businesses and industry professionals are extended a form of credit when purchasing a bond from a surety company. This is because any claim against a bond must be repaid by the bondholder after it is initially paid by the surety company.
Therefore, a credit check is used to ensure the bondholder can and will repay any bond claims that arise in the future.
Why Does Bad Credit Make You a High Risk?
Surety companies use your credit history as a tool to assess how you might handle bond claims if they occur. As mentioned above, you're responsible to pay claims on your bond, including any legal fees. Depending on what the bond guarantees, your credit history is often a good reflection of your potential to cause and pay for claims. Exceptions are made for extenuating circumstances such as medical issues.
Some ask, "are there surety bonds for bad credit?" No, a bad credit bond type doesn't exist—but there are companies such as ours that can get you approved using specialty programs. You can also take a look at the most frequent surety bond related questions here.
How Much Does a Bad Credit Surety Bond Cost?
A surety bond generally costs anywhere from 1% - 15% of the total bond amount, depending on the type of bond and your financial strenth. For example, a $10,000 bond will cost $100-$1,500. With bad credit, you can expect to pay toward the higher end of that scale.
Who Should Get a Bad Credit Surety Bond?
Remember, there is no such thing as a "bad credit surety bond". However, surety bond companies such as ours are able to get you approved using specialty programs.
Contact our bond experts today for more information.
Frequently Asked Questions
Yes. We have access to exclusive bad credit surety bond programs, which many other agencies don't. You can get an online license & permit bond quote instantly on our website, even if you have a bankruptcy in your credit history. It is possible to get a contract or court bond after a bankruptcy, but it must be discharged within 3-5 years ago and explained in detail.
Yes. Due to bulk volumes, we write bonds for people with bad credit at lower rates than any other agency. However, most bond programs will still look at credit as a factor for determining the rate, which credit flaws can only affect negatively.
Yes. Getting bonded with no credit history is not a problem for license & permit bonds. It's possible to obtain court bonds without a credit history, but whether you can get approved will depend on the circumstances surrounding the case/estate and whether you're working with an attorney (which is highly recommended). If you are a smaller contractor looking for contract bonds, they're possible to get without a credit history, but you'll have to get bonded through the SBA program and you will likely be limited to smaller jobs. If you're a larger contractor with strong CPA prepared business financials, you can get bonded for public jobs, even if the owners lack personal credit history.
Typically, no. Smaller contract accounts are based strictly on personal credit, and there are no high-risk programs. Larger contract accounts might be able to qualify, but you will need strong CPA business financials.
Usually, yes. However, it depends on the circumstances and amount of collections. Most underwriters are willing to overlook medical collections or small collections that have been satisfied.
In most cases, yes. For contract bonds, it may prevent you from getting approved at all. Open judgments never have a positive effect on your assessed risk.
Contact us immediately, as we have a team of claim specialists here to find a resolution for you. While insurance companies also offer bonding, they don't have the same expertise as our bond experts when dealing with claims. Learn more about how to ensure you choose the proper bond company.
You can take a look at our full list of license and permit bonds.