Can Low Credit Score Affect Surety Bond Cost?

​If you are a business owner or manager, you need to know how your credit score can affect the surety bond cost. Surety bonds are required for many different types of businesses. If your company is required to have one, you need to know what the cost will be. 

​​This article will explain how surety bond costs are calculated and how your credit score can affect them.

Why does my credit score matter?
When you have to take out a surety bond, you have to meet certain criteria. A surety bond needs to be backed by tangible assets such as a bank account or property. This requirement keeps bond buyers from putting your company in an economic hardship situation. It also makes sure you can use the surety bond if you need to.

How Surety Bond Costs are Calculated
Your surety bonding company will know which level of coverage your business needs. They'll charge a certain amount for each level, based on your business's risks. Insurance companies also often use a variety of formulas to determine your surety bond cost.

So, the first thing you need to know is how much your surety bonding company will charge for their services. They'll calculate the cost by running different scenarios and looking at your business.

How your Credit Score Affects Surety Bond Cost
How your credit score affects surety bond cost depends on the bonds you have chosen to secure. For example, if you have a $5 million surety bond, you will pay a $2.5 million surety bond premiums, and your credit score will be factored in to determine the amount of money you need to pay.

What Can I Do About My Credit Score?
The first thing you should know is that there is not much you can do about your credit score. However, it is good to know what your credit score is. If your credit score is low, it can affect the cost of your surety bond.

Your credit score is an estimate. It is based on all of the information you provide to the company. However, the company will not know your actual credit score. The calculation will use its formula. Your credit score is not going to be as accurate as you expect.

At Appletree Insurance, we aim to provide comprehensive insurance policies that make your life easier. We want to help you get the insurance that fits your needs. You can get more information about our products and services by calling our agency at (603) 881-9900. Get your free quote today by CLICKING HERE.