Bad Credit/High Risk

• There are many categories of surety bonds in commercial transactions. Bad credit surety bonds, also called high-risk surety bonds, are not a separate category of bond, but a special program for individuals and companies with bad credit histories that need bonds.
  
  

Qualifying

• The best part of bad credit bonds is that just about everyone who applies will qualify, regardless of prior bankruptcies, lack of credit history and work experience, poor credit scores or history of civil judgments.
  
  

Premiums

• The bad news is that premiums for bad credit bonds will be significantly higher, anywhere from 3 percent to 20 percent of the bond amount.
  
  

Cash Collateral

• The surety company may also require you to put up a cash fund, such as a certificate of deposit, as collateral for the bad credit surety bond.
  
  

Alternatives

• Before paying the high premium or posting cash collateral, find out if the other party in your transaction will accept the cash collateral or a trust fund as security in lieu of the bond.