What does a surety bond cost?
The cost of a surety bond depends mainly upon your personal credit score. The higher your score; the lower your cost. The price of your surety bond or rate should be in between 1-3% of the total bond amount needed. To put this in perspective, a 1-3% rate would mean a $10,000 surety bond costs between $100-$300 annually.
Conversely, if you have bad credit or a low credit score, the surety bond cost will be higher. Your surety bond cost should be in between 5-10% of your surety bond amount. The same $10,000 surety bond amount used in our previous example would be $500-$1,000 for individuals with bad credit. Luckily DBL Surety has a bad credit program which allows us to place bonds for individuals regardless of credit score.
How do I lower my surety bond cost?
As mentioned above, your bond cost is primarily based on your personal credit score. However, there are other items which can lower your premium. The most important of these factors is prior experience and length of time in business. These two items can reduce your bond cost as compared to a brand new business owner without experience.
For surety bonds greater than $100,000, your company’s financial statements can also assist in lowering your bond premium. Companies with appropriate cash balances, positive working capital, and sufficient net worth will help lower your bond rate. In some cases, your cost can be less than 1% of the bond amount needed! Additionally, higher quality financials prepared by a certified public accountant can further reduce your rate.
How do surety companies view my credit score?
Each surety company may use a different credit reporting company to view your credit score. Some use Experian while others may use TransUnion or Equifax. Each credit reporting company reports a different score based on your credit history. However, these credit reports are considered “soft pulls” and are different from those “hard pulls” which affect your credit score. A surety company will look not only at your credit score but also the information contained on the report. They will often put more weight on late pays and past due amounts relating to credit cards than they would past due medical expenses or student loans. You can always request a copy of your credit score by contacting the credit reporting company used by the surety company.
How do I apply for a surety bond?
Applying for a surety bond has never been easier and is the only way to determine your exact surety bond cost. DBL Surety utilizes an online surety bond application which allows you to apply online. For your convenience, we also offer a fill-in-the-blank Adobe PDF surety bond application which can be printed and returned to us via fax or email.
I know my surety bond cost so what’s next?
All you have to do is let DBL Surety know you’re ready to purchase your bond and we take care of the rest. You’ll receive an invoice for the amount quoted and most likely another document called an indemnity agreement. This is a legally binding agreement which is required by the particular surety company who will write your bond. Please read it carefully, sign where indicated, and return the agreement to us via email or fax. The bond can be released as soon as both the payment and signed agreement are received.
How long will it take me to receive my surety bond?
Most bonds are issued the same day that both payment and the agreement are received. We pick up the tab for normal shipping but also offer expediting shipping because we understand time is of the essence in some cases. Let your surety bond representative know if you would like your bond expedited and we’ll provide you with a tracking number so you can follow your surety bond while in transit to your address.
Learn more about what is a surety bond!