Possible Reasons Why Your Surety Bond is Denied

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Why do corporations refuse to accept surety bonds?

A corporation may refuse a bond for a variety of reasons. For starters, a corporation may refuse to issue a bond due to the applicant’s previous experience. Before accepting an application as a customer, a surety firm would examine him or her to guarantee that he or she has had no past difficulties with other bonding companies and that the individual is trustworthy and reputable. A surety bond may be impossible to get if the applicant has bad credit or a criminal background.

The applicant’s financial information does not meet the bonding firm’s criteria, which is the second reason a company could decline an individual’s surety bond application. Some firms have highly strict standards for admitting applications and demand particular qualifications in order to be authorized. The applicant will not be able to get a bond unless he or she meets these standards.

Last but not least, applicants may have their surety bond applications denied if they request a bond that is excessively large or complicated. Some businesses may only give surety bonds up to a specified amount (for example, $25,000), while others would only provide surety bonds for specific sectors (for example, construction).

Furthermore, some firms are unable to hire subcontractors because their bonding provider does not provide coverage for that sector. Applicants should bear this in mind while deciding the sort of surety bond to acquire and double-checking their eligibility before applying for a policy.

What makes you ineligible to get bonded?

A variety of issues might put your ability to secure surety bonds in jeopardy. Poor credit history is the most typical cause for an application being refused. Applicants having a history of delinquencies, charge-offs, or judgments against them are deemed high-risk and hence have a lower chance of being authorized for bonding.

If you have bad credit, you might want to explore replacing the bond with another kind of collateral or finding ways to explain any blemishes on your credit record before applying with a firm.

Unpaid taxes owed to the IRS or the state are another aspect that can cause applicants a lot of trouble. Companies will look into this during the underwriting process, and if they find unpaid taxes, they will disqualify applications. Before applying for a bond, you may need to remedy this issue.

If you have had previous filing or payment troubles with other bonding providers, you may be refused. This is due to the fact that the firm will not want to take the risk of hiring someone who has previously failed to satisfy duties in another field. If your application is declined, you should do some basic research to see if there are any simple measures you can do to strengthen your application before submitting it to another assurance firm.

How are surety bonds are underwritten?

The underwriting section of a corporation reviews surety bond applications. Each application is examined, and an underwriter will make a judgment based on the facts provided in the application as well as the results of a background check.

Applicants should be aware that a good credit score does not guarantee that they will be authorized for a bond. Companies have varied standards for admitting applications, so just because you weren’t approved by one surety doesn’t imply you won’t be accepted by others.

What will you do if your application for a surety bond is denied?

A denial of an application does not imply that the applicant has been blacklisted in the bond business. Many times, a business will make a choice based on its risk assessment and other considerations.

If your application for a surety bond has been refused, you should resubmit with a business that handles bonds in your sector. Before trying again, you may wish to address any areas that led you to be refused, such as your credit score or paying off any outstanding IRS taxes.

What are some of the most typical causes for surety bond denials?

Poor credit history, unpaid taxes owing to the local, state, or federal government, and having a criminal past are some of the most typical reasons applicants are denied a bond. If you have any of these characteristics, you should concentrate on increasing your prospects before reapplying with another organization. Additional considerations that may influence a surety bond application include:

  • Driving records that aren’t in your favor. In certain places, driving without insurance is permitted, but it will reflect adversely on your application. DUI/DWI convictions within the past seven years may potentially pose a problem when filing for bail.
  • Failure to pay financial commitments on time, such as a mortgage, rent, or credit card payments. Having a lot of debt or unpaid taxes might also work against you when it comes to the underwriting procedure. If you suspect one of these issues caused your application to be declined, try correcting the issue before applying again.
  • Having a criminal record is a big no-no. Whether you have a felony record, you may be unable to acquire a surety bond, so find out if your offenses will affect your ability to receive bonding insurance before applying. If you just have minor convictions, this may not be as significant, but practically every company will investigate an applicant’s criminal background, so it’s better, to be honest about anything that might lead to rejection.

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