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"I have been doing business with your company for several years and I wanted to take this opportunity to let you know how pleased I am with your service. The staff is always very professional and courteous and I am very impressed with their efficiency and promptness in handling my very need."
- Sandi Ortiz, Pinnacle Estate Properties
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How your Personal Credit Affects your Bonding Capabilities Similar to applying for a personal/business line of credit, the qualification process for many surety bonds requires a personal credit check of the applicant and/or business owners during the underwriting and approval process. As the Bonding Company provides a guarantee against the default of the individual or entity for which they are providing the bond, it is often underwritten much like one is applying for a loan. An examination of their personal credit history is utilized by the Surety as a means of determining an individual and/or company’s financial responsibility. It is thought that the manner in which a person handles his/her personal finances often carries over to other aspects of their lives. In addition, loss studies have concluded there is a direct correlation between a person’s credit score and how it relates to loss ratios. There is, undoubtedly, a greater probability of a loss relative to the lower an applicant’s personal credit score.
In extremely broad terms, a surety underwrites an applicant’s credit/FICO score according to the following terms:
| Credit Score | | 750 & Above | 700-749 | 699-675 | 674-650 | 600 & Below | | Excellent | Above Average | Good | Fair | Poor |
When a Surety underwriter reviews a personal credit report, they not only consider the credit/FICO score of the applicant but take into consideration the following most derogatory items that might be reflected in the report:
- Delinquent/missed payments
- State/federal tax liens
- Bankruptcies
- Judgments
Such items can remain on an applicant’s credit report for seven to ten years and can restrict a person’s bonding capabilities.
Due to privacy laws, the surety may not disclose their credit report findings to the agent representing the applicant. In addition, they are not obligated to discuss their underwriting determinations with the applicant based on their personal credit however, the surety will often supply a bond declination letter to the applicant as a means of them having the ability to contact the respective credit bureau for a free copy of their report.
It is highly recommended that one consistently access and review their credit report as a means of being aware of their credit standing as well as detecting fraudulent and/or improper reporting’s. One should access all three credit bureau reports as follows: It is important to note that all three Credit Bureaus system for credit scoring is different therefore, your credit score may not remain consistent between the three reports. These bureaus also provide a wealth of valuable tips and tools as to how to maintain and improve your credit score over time. One valuable source for obtaining your credit report, free of charge is www.freecreditreport.com, although other web sites offer similar services.
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