You may find that qualifying for a surety bond is similar to qualifying for a loan. You may be asking, “How is a surety bond like a loan?” When qualifying for a surety bond, for many, the surety will run your credit report to find a financial responsibility score. Some look at the credit score while other sureties may use information found in the credit report to help decide if you qualify for a bond and not rely simply on the credit score. When a surety company issues a bond, they are extending credit to a principal.
How is a surety similar to a bank?
How is a surety similar to a bank? If a qualifying for a surety bond is like qualifying for a loan, you may wonder, how is a surety similar to a bank? Here are a few ways they compare:
- A surety charges a premium for a bond and expects to be paid back from a principal (the party required to get the bond in order to qualify for a contract, license or permit) in the event of a loss, much like a bank expects borrowers to repay loans.
- A surety, like a bank does not expect to suffer a loss and has a right to pursue a principal that defaults on their responsibility causing the surety to pay out.
- A surety give the principal something very important. They give the principal the benefit of their credit standing in order to qualify for a permit, license or contract, even the opportunity to bid for a contract. In return, like a bank giving a borrower the benefit of the bank’s money, in the case of a default, the surety has the right to recover their funds.
Surety Bond and Insurance
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International Performance Bond Surety How is a Surety Bond like a loan? or performing services on a US Military Base anywhere in the world, we offer our expertise and unmatched capabilities to you!
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