What is an Ohio Credit Services Organization Bond?
Credit services organizations (CSOs) in Ohio have to get licensed before starting legal operations in the state. You need to obtain a credit services organization bond as a part of the process
With the surety bond requirement, state authorities want to ensure a higher level of security for the customers of CSOs. The bond can serve as a safety net in case such organizations engage in illegal and harmful activities.
The surety bond that you get, in practical terms, is a contract between three parties. Your credit services organization is the principal that has to provide the bond. The Ohio Department of Commerce is the obligee that sets the licensing criteria. Last but not least, the surety is the third entity that provides the bonding.
Questions about Credit Services Organization Bonds in Ohio
When do I have to provide this surety bond?
If you want to operate as a credit service organization in Ohio, you need to get licensed with the state Department of Commerce.
You have to provide a $50,000 surety bond to meet state criteria, which needs to be presented in the official bond form. By submitting the bond, you guarantee your compliance with the Ohio Credit Services Organizations Act.
How much does the Ohio credit services organization bond cost?
The bond amount that you have to post in order to get your Ohio credit services organization license is $50,000. However, your bond price is only a small fraction of it called the bond premium. If you can demonstrate strong finances, the usual rates are between 1% and 5%.
|Surety bond name||Surety bond amount||Above 700||Between 650-699||Between 600-649||Below 599|
|Ohio credit services organization bond||$50,000||$375-$750||$500-$1,250||$1,250-$2,500||$2,500-$5,000|
What are the factors that determine your surety bond cost? The surety that you apply with has to consider your personal credit score and business finances. It may also take a look at your assets and liquidity, as well as your business knowhow.
By assessing these criteria, the surety can measure the level of bonding risk. The lower it is, the smaller your bond premium is likely to be.
Can I get this bond with bad credit?
For applicants with a low credit score, bankruptcies, tax liens, or civil judgements, Lance Surety Bonds runs its Bad Credit Surety Bonds program. If you are facing such issues, you can still get bonded with us.
The bonding rates that we offer in this program are in the range of 5% to 10%. As we cooperate closely with a number of A-rated, T-listed surety companies, we are able to offer you a great bonding option regardless of your credit score.
How do I get bonded?
Do you want to delve in the nitty-gritty details about the way bonding works? You can consult our extensive overview on our How to Get Bonded page.
We are here to help with your questions or bond application. Just call us at (877) 514-5146 to get in touch with one of our bonding specialists.
What happens if I get a claim against the bond?
It’s important to remember that bonding doesn’t work like insurance for your business. It protects your customers from fraudulent and illegal activities that you may engage in. Harmed parties can make claims against your surety bond to seek a fair reimbursement.
For proven claims, you are liable to cover a penalty up to the bond amount you have posted, which is $50,000. The surety that bonded you will pay the costs at first, but you have to compensate it soon after. This means that bond claims remain your responsibility and thus can be harmful to your business.
The best course of action is to avoid situations that can give rise to claims.
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