Contractor license bonds are vital because they’re able to guarantee that a particular contractor can be able to operate their business in compliance with certain regulations and rules that pertain to a particular contractor license. These bonds mainly try to protect the public from being ripped off by contractors.
This article clearly tries to look at Why contractor bond pricing is determined by credit. The cost of a contractor license bond is mainly dependent on your personal credit. If a contractor has stellar credit, then this means that he or she is eligible for standard market rates. The range is mainly between one percent to three percent of a particular amount of the bond. To get the most accurate quote complete a contractor bond form with an established surety company.
If you have items that are already past due on your credit account or if you have a low credit score, then the rate for annual premium mainly ranges between 5% to approximately 15% of the total amount of the bond.
It is worth noting down that there is a surety credit that a surety company can provide to a particular contractor. Contractor bond pricing is mainly based on credit because surety companies mainly try to find contractors who are less likely to cause any financial losses to their companies according to California based, ContractorBond.org.
How Credit Affects Contractor Bond Pricing
– Credit mainly acts as an indication whether a particular individual can pay all their debts on time. If they’re unable to pay them on time, then they have bad credit. Bad credit directly affects your chances of getting a contractor bond license.
– A person who has bad credit can be approved for a bond, but they have to pay a higher price than an individual who has a stellar credit.
– This means that if you want to increase your chances of being approved for a contractor license bond at a very reasonable price, you should try to maintain stellar credit at all times.
The pricing of a contractor bond is therefore determined by five factors.
Below are some of these factors.
– Your personal credit plays a major role in determining how much you have to pay to get a contractor bond license.
– The amount of cash you have on hand.
– Your industrial experience
– It is also dependent on your business financials.
– Your personal financials also affects the pricing of a contractor bond.
Finally, if you’re an experienced contractor looking to get a better deal for your contractor bond license, ensure that you always pay all your debt on time so that you can maintain a better credit score. Do your research with several online listings to find the company that is going to give you the best pricing and customer service.