Why do some Surety Bonds require a personal credit check for approval of the bond?
The manner in which a Bonding Company underwrites a particular bond type is determined based on the level of risk they assess to that bond. In many cases, the Bonding Company’s claims loss history for a particular bond type plays an important role in the underwriting criteria of an applicant, as well as the premium rate being charged for the bond. Credit reports serve as a useful and reliable source of information regarding an individual’s financial outlook and history, as well as their timeliness of payments to creditors. All in all, a review of one’s credit report can determine their ability to manage finances and is one of the only avenues available for a Surety Company to determine the competency of an applicant.
