Surety bond is financial protection similar to an insurance policy. The difference between a surety bond and an insurance policy is that a claim against a bond must be paid back while one against your insurance does not. This means a bonding company will perform a thorough background check on every applicant. A bad credit rating will force you to pay more for a surety bond. There are many major surety bonding companies nationwide and each is specialized in certain type of bonds, some only service cleints with preferred credit history while others service clients with poor credit history and they underwrite the surety bond based on his/her credit history. The rate for clients with poor credit history vary from 3% to 20% in premiums of the requested bond amount.
When a promise is made among friends, the promise is usually taken at face value with no strings attached. When a promise is made in business or other situations between parties that do not know one another, surety bonds are sometimes issued as a mechanism to protect the party being promised something. The party making the promise, or principle, gets the surety bond from a bank, surety compnay or insurance company, which insures payment of the bond in the event that the oblige fails to pay. The bond is then given to the oblige–the party to whom the promise has been made. That is why credit history is essential to qualify for a preferred rate when purchasing a suerty bond. Check www.allstatesuretybonds.com to a get a a surety bond quote or call 800-374-9227 for any questions.