Credit Services Organization (CSO) Bond
If you plan to start a career in credit services or debt management, you may need to obtain a surety bond first. You can't start your career until you have one of these bonds, and you can't continue your career without keeping the bond in good standing. That makes surety bonds incredibly important to your professional future. Find all the important info you need on this page.
What is a Credit Services Organization Bond?
Also referred to as a debt management bond or a credit repair bond, a CSO bond makes the bondholder accountable for following all applicable laws and regulations. There are three parties involved in this and all surety bond types:
- Principal – The person that obtains the bond and pays for claims.
- Obligee – The entity that requires the bond. The obligee may file claims for compensation against the bond because of damages caused by misconduct on the part of the principal.
- Surety – The company that underwrites the surety bond. If the principal refuses to pay for a claim, the surety guarantees an immediate settlement. However, the principal must repay the surety the entire settlement amount plus any interest and fees incurred by not settling the claim initially.
How Does a Credit Services Organization Bond Work?
Professionals who help clients manage credit and debt are subject to sweeping regulations at the state and local level, including surety bond requirements. CSO bonds are a way to incentivize them to follow all those rules – and hold them accountable when they don't.
The surety bond allows anyone who believes a credit services provider has not acted in a legal or ethical manner, causing financial damages to the client, to file a claim against the bond for compensation equal to the damages.
The surety will investigate every claim it receives using whatever professionals are necessary: lawyers, investigators, accountants, etc. When the principal is not at fault, the claim gets rejected. However, if a claim has merit, the surety guarantees the claimant a full settlement without further delay.
After paying, the surety will use whatever means necessary to collect the settlement amount – plus interest and fees – from the principal. The person who holds the bond and accepts liability for claims under the bond agreement must eventually pay for all claims.
If the debt goes unpaid, it could be sent to collections or lead to lawsuits. This will also lead to loss of bond coverage and make it harder to secure a replacement bond.
Who Needs a Credit Services Organization Bond?
A little more than half the states in the US require some form of surety bond for credit repair businesses. Someone will need to secure a bond before they can provide any professional services. Loss of bond coverage can also complicate the legal authorization to work, making any future services subject to strict penalties. It pays to have a good bond partner from beginning to end – one that can make getting and keeping a bond stress-free. Rely on Viking Bond Service to connect you with bonds in every state that requires them.
How to Obtain a Credit Services Organization Bond?
It takes just a few simple steps to obtain a CSO bond:
- Complete a standard bond application
- Undergo a credit check
- Provide supplemental documentation
- Get a bond quote
- Pay the premium to activate coverage
- Show the obligee proof of bond coverage
Credit services providers will also need to renew their bond on an annual basis. At renewal, underwriters will review credit changes and adjust the premium price accordingly.
What Does a Credit Services Organization Bond Cost?
The cost of a surety bond is unique to each bond seeker. Underwriters will quote a cost for the premium based on the type of bond, the size of the bond, and the applicant's credit. Expect to pay a small percentage of the required coverage limit. Bad credit will lead to higher premiums and may make getting a bond more challenging. Take advantage of the bad credit surety bond program from Viking Bond Service, where we use our ample resources to connect bond seekers with more bond offers at competitive rates even if they have less-than-stellar credit.
Viking Bond Service – America's Surety Agency
Credit services providers across the country make us their preferred bond partner for one simple reason: we make bonding easy. Meet your bond requirements without unnecessary time, hassle, or cost. You can request a bond quote at any time and expect to get a figure within 24 hours. Our team is also your best resource for information and insights about surety bonds. Contact us with questions or call 1-888-2-SURETY (1-888-278-7389) to speak directly with a surety bond expert.
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