Credit Services Organization Bond | Credit Repair Company Bond
What is a Credit Repair Bond?
A credit services organization bond (a legal term for what is simply a “credit repair bond”) is a surety bond that many states require to operate legally as a credit repair organization. This surety bond exists to protect the public against illegal, negligent and wrongful acts by a credit repair company or organization.
This bond is not insurance for a credit repair company. This bond protects the public. Any claims paid on a credit repair surety bond must be reimbursed in full by the credit repair company. This would potentially include any legal fees, and could, theoretically, be a greater amount than the value of the bond.
Do all states require a credit repair bond for credit repair companies?
Not all states have a surety bond requirement for credit repair companies, and for those that do, the amount of the bond will vary from state to state. Even rules within a state can vary, so you will want to familiarize yourself with relevant state laws.
A Texas credit services organization bond is for $10,000, whereas a credit repair bond for California is for $100,000.00. In Texas, however, the law states that a surety bond will need to be issued in every location of a credit repair company.
As of this writing, Colorado, Michigan, Mississippi, Montana, New Jersey, New Mexico, New York, North Dakota, Oregon, Rhode Island, and South Dakota, don’t require a credit services organization bond.
Keep in mind, however, that legislation in these ‘no credit repair surety bond’ states can change at any time. And even in states where surety bonds are required, there may be changes in state regulations as well that can relate to the amount of the bond or requirements required to get one.
Credit Repair Organizations Act
Even if your resident state doesn’t require you to have a surety bond for your credit repair company, you will still need to comply with federal law as it relates to operating a credit repair business.
CROA (Credit Repair Organizations Act) is a federal statute that applies to all 50 states. It does not matter whether or not a surety bond is required to operate your credit repair company.
For example, all credit repair companies are prevented from collecting payments upfront. Yes; credit repair companies are required to first do the work involved in disputing or “repairing” credit items, and then bill for such items afterwards. In effect, credit repair companies are supposed to bill in arrears.
Consequently, and to stay competitive, many credit repair companies have now embarked on a new business model: They only charge clients for items which are successfully deleted or updated. Not only does this business model keep them in compliance with state regulations, it is also consumer-friendly in that only tangible results are paid for by customers.
How Much is a Credit Repair Bond?
The price of a credit repair bond will be contingent on two major factors:
- The amount of the credit repair bond required by your state. (Again, some states require a $10,000 credit repair bond; others, like Nebraska and California, require a $100,000 bond).
- Your credit score. If your credit score is very good, obviously, your bond price will be substantially lower. Generally, speaking, 2-3% of the bond amount will be the cost of the bond for those with higher credit scores.
What if I have bad credit? Can I still get bonded as a credit repair company?
Customers and potential customers of AmeriPro Surety Bonds should never be embarrassed by their lower credit scores, even if they happen to also operate a credit repair company. We are here to help you.
In those cases where both the bond amount and bond premium will be substantially higher than normal due to lower credit scores, we may have a viable, workable solution to both get your credit repair bond while going easy on your wallet.
AmeriPro Surety Bonds
AmeriPro Surety Bonds is a surety bond-only company. We provide surety bonds for all 50 states. Call us today at 844-589-9732 to get your credit repair bond.