Bad Credit Surety Bond for Canadian Businesses
The Bad Credit Surety Bond – Is It Possible Or A Pipedream?
Whether you’re a professional, preparing for court, or wish to acquire the right to a construction project, it is likely that you’ll be required to obtain some types of surety bond. There are numerous scenarios, in which Canadian citizens will be faced with this type of dilemma. Unfortunately, not all Canadians have been able to maintain immaculate credit scores. Getting into debt can be surprisingly easy and your credit score could suffer, before you even know it. The good news is that it is possible to acquire a construction surety bond with bad credit. Below, you’ll learn about the process.
What Is Classified As Bad Credit?
Before rushing ahead, you should take the time to confirm that you indeed do have bad credit. Acquiring your personal credit score from one or more of the three major reporting agencies is highly recommended. Doing so will give you the ability to obtain your specific score, while also having a better chance to locate and rectify errors. Generally, credit scores can range from 400 points to 900 points. Although each company is unique, the majority will agree that good scores start at 600 and get better, as the number increases.
If you’re able to acquire 750 or 850, you’re in luck. Unfortunately, if you’ve allowed your credit score to dip below 600, you’ll fall within the bad credit category and will face a stiffer challenge, when attempting to obtain a SURETY BOND CANADA.
The First Steps
When it comes to getting a construction surety bond with bad credit, you’ll need to take baby steps. First and foremost, you’ll need to locate a few reliable surety companies and begin applying for their services. Each surety company is different and their qualifications may vary. Therefore, if you happen to get rejected by one company, you should proceed to the next, until you find one that grants you approval.
Approval And Costs
Once the surety company has approved you, they will also provide you with a cost estimate. Your surety agent will provide you with this information and will also construct the contract. If you’re happy with the fee in question, you will want to go ahead and pay the initial premium. After the payment has been processed and you’ve signed the contact, you’ll acquire the bond. The biggest difference between bad credit surety bonds and good credit bonds is the price. Those within the former category will face higher fees and vice versa. To read about the approval process, click here.
How Much Does A Surety Bond Cost?
While a low credit score will affect your ability to get approved for a construction surety bond, but if you are lucky enough to get approved, it will affect the cost. In order to come up with the total cost of a surety bond, the applicant’s credit score and length of years in business will be included in the equation. The percentage amount can range anywhere between 1.5-20%. Of course, applicants that have an open bankruptcy case and recent unpaid surety claims will not be issued a surety bond.
For example, if your credit score is over 600, but lower than 650, the rate will be between 12.5-15% of the full bond amount. In this case, the years in business will not affect the costs negatively or positively.
At the end of the day, bad credit will not prevent you from obtaining a surety bond, but it may delay the process to a minor degree. It will also increase the costs. To help find the lowest cost possible, you should set aside an extensive period of time and put in a great amount of effort shopping around with a handful of surety companies. Don’t stop, until you find a reliable company, which has quoted a reasonable fee that works well with your budget.