Surety bonds are more than useful, they are essential in running a contractor business in these times. If you do not have a surety bond, you are at a severe disadvantage to contractors that do have one, because so many of the bg companies that pay more are not going to hir ea contractor that does not have a surety bond. You have to have one. So what happens if you have bad credit? How does your credit affect how, or if, you get a surety bond?
First, you have to understand how a surety bond works. It is more like a line of credit than a insurance policy. Since the surety bond company is extending this amount of money to cover anything you do wrong, which they will pay and you will repay, it is imperative from their perspective that you have a good record of paying your debts. If you do not, then you are not going get a surety bond. They can’t trust that you will pay it back.
Second, once you are a credit risk, you are not going to be able to get on the “good list”. This is a self repeating cycle. You can’t get a surety bond because you are on the list of people who cannot get one because you have bad credit. How to correct this? Start with a high risk surety bond.