Overview of Utah Credit Services Organization Bond Requirements
To operate as a credit services organization in Utah, you will need to apply for a license at the state Division of Consumer Protection, part of the Department of Commerce.
As part of the licensing process, you will need to provide a $100,000 credit services organization bond.
Why do I need a bond?
This bond functions as a guarantee that you will comply with the provisions of the Credit Service Organizations Act as well as all rules issued under the Act.
If you violate your obligations under these laws, a claim may be filed against your bond for any damages that arise due to such a violation.
In such an instance, the surety that has issued your bond must investigate the situation and determine whether you are liable for the claim and what amount of compensation must be extended to claimants. Such compensation can, possibly, be as high as the total amount of your bond.
If you'd like to learn more about how surety bonds work and why they are required, see our ‘What is a surety bond' guide!
You can find out more about the cost of your bond, how bond claims occur, and how you can get bonded in the sections that follow below!
If you have any additional questions about this type of bond, go ahead and call us at 866.450.3412!
How Much Does The Utah Credit Services Organization Bond Cost?
The amount of the Utah credit services organization bond is $100,000. This is the maximum amount of compensation that may be extended to one or several claimants who bring an action against your bond.
The cost of your surety bond, on the other hand, is equal to a percentage of its total amount. When you apply to get bonded, the surety you apply with will offer you a rate at which you can get bonded, based on several factors.
Factors that influence your bond premium
The primary and most important factor that determines your bond cost is your personal credit score.
Your credit score is important because sureties use it as an indicator of how likely it is that a claim will be filed against your bond.
Applicants with very high credit scores are considered highly unlikely to give rise to a claim and therefore receive some of the lowest possible rates on their bonds. Such applicants are typically bonded at a rate between 0.75% and 1.5% of the total bond amount.
Applicants with slightly lower, yet relatively high rates, are typically bonded somewhere within the range of 1.5% to 5%.
Those applicants who have so-called low scores at the time of applying for a bond are offered a rate that may vary between 5% and up to 15% of the bond amount, depending on their score.
Apart from your credit score, your surety is likely to also request to review some of the following, in order to more accurately set your rate:
- Personal and business financial statements
- Fixed and liquid assets
- Work experience and record
You can get a sense of how much your bond may cost, based solely on credit score, from the table below!
|Utah Credit Services Organization Bond Cost Based on Credit Score|
|Above 700||650-699||600-649||Below 599|
|Utah credit services organization||$100,000||$750-$1,500||$1,000-$2,500||$2,500-$5,000||$5,000-$7,500|
How Do Bond Claims Occur?
Utah Code 13-21-3 requires licensed credit services organizations to be bonded as a guarantee for their compliance with their legal obligations.
The purpose of the bond is to cover the losses of any person that arise due to a CSO's violation of their obligations and responsibilities.
If a person brings an action against a CSO's bond, the surety that backs the bond must investigate the claim and determine its validity. If the claim is deemed valid by the surety, it must extend compensation in a sufficient amount to cover for the claimant's losses.
When the surety covers a claim, the CSO that gave rise to the claim with their actions must reimburse the surety in full. This is a usual condition of every bond agreement, because liability always lies with the bonded party.
The safest way to avoid giving rise to a claim is to strictly comply with all conditions of one's bond agreement.
How Can I Get This Bond?
You can immediately request a free and exact quote on your bond by clicking on the banner below and completing our simple bond form. We will then provide you with your quote, along with full details on how to complete the bonding process.
If you have any further questions about this bond or require help with your application, call us at 866.450.3412!