Illinois Credit Services Organization Bond: A Comprehensive Guide
May 3, 2021
This guide provides information for insurance agents to help credit services organizations obtain Illinois Credit Services Organization Bonds
At a Glance:
- Average Cost: Between $1,000 to $7,500 per year based on the applicant’s credit
- Bond Amount: $100,000
- Who Needs it: All credit services organizations who accept payment before the completion of the agreed-upon services
- Purpose: To ensure the public will receive compensation for any damages should the credit services organizations fail to comply with registration law
- Who Regulates Credit Services Organizations in Illinois: The Illinois Secretary of State
Background
The Illinois Credit Services Organizations Act requires all credit services organizations operating in the state to register with the Secretary of State. The Illinois legislature enacted the registration laws and regulations to ensure that credit services organizations engage in ethical business practices. In order to provide financial security for the enforcement of the registration law, credit services organizations who accept payment prior to completing the agreed-upon services must purchase and maintain a $100,000 surety bond to be eligible for registration.
What is the Purpose of the Illinois Credit Services Organization Bond?
Illinois requires credit services organizations to purchase a surety bond as part of the application process to obtain a business registration. The bond ensures that the public will receive compensation for financial harm if the credit services organization fails to comply with the registration regulations. In short, the bond is a type of insurance that protects the public if the credit services organization breaks registration laws.
Do All Credit Services Organizations in Illinois Need to Purchase a Bond?
As mentioned above, only credit services organizations who collect payment prior to the full completion of all agreed upon services must purchase a $100,000 surety bond. If your customer only collects payment after completing all services, then they are not required to purchase a surety bond.
How Can an Insurance Agent Obtain an Illinois Credit Services Organization Surety Bond?
BondExchange makes obtaining an Illinois Credit Services Organization Bond easy. Simply login to your account and use our keyword search to find the “credit” bond in our database. Don’t have a login? Enroll now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email or chat from 7:30 AM to 7:00 PM EST to assist you.
At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.
Is a Credit Check Required for the Illinois Credit Services Organization Bond?
Surety companies will run a credit check on the owners of the credit services organization to determine eligibility and pricing for the Illinois Credit Services Organization Bond. Owner’s with excellent credit and work experience can expect to receive the best rates. Owners with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the owner’s credit.
How Much Does the Illinois Credit Services Organization Bond Cost?
The Illinois Credit Services Organization surety bond can cost anywhere between $1,000 to $7,500 per year. Insurance companies determine the rate based on a number of factors including your customer’s credit score and experience. The chart below offers a quick reference for the approximate bond cost on the $100,000 bond requirement.
$100,000 Credit Services Organization Bond Cost
| Credit Score | Bond Cost (1 year) |
|---|---|
| 800+ | $1,000 |
| 625 – 799 | $1,500 |
| 575 – 624 | $3,750 |
| 550 – 574 | $5,000 |
| 500 – 549 | $7,500 |
*The credit score ranges do not include other factors that may result in a change to the annual premium offered to your customers, including but not limited to, years of experience and underlying credit factors contained within the business owner’s credit report.
How Does Illinois Define “Credit Services Organization?”
The Illinois Credit Services Organizations Act defines a credit services organization as any business entity that performs on or more of the following services:
- Improves a buyer’s credit record, history, or rating
- Obtains an extension of credit for a buyer
- Assists the buyer with regard to the above services
How do Credit Services Organizations Apply for a Registration in Illinois?
Credit services organizations in Illinois must navigate several steps to secure their registration. Below are the general guidelines, but applicants should refer to the registration statutes for details on the process.
Registration Period – The Illinois Credit Services Organization Registration does not expire unless the registration has been revoked, suspended, or the registration holder ceases business operations
Step 1 – Purchase a Surety Bond
Credit services organizations who collect payment prior to the completion of services must purchase and maintain a $100,000 surety bond
Step 2 – Hire an Authorized Agent
Credit services organizations must hire an authorized agent who can accept service of process (notice of a legal complaint or court documents) on behalf of the organization
Step 3 – Complete the Application
All Illinois regulatory credit services organizations registration applications should be mailed to the following address:
Secretary of State
Index Department, 111 E. Monroe
Springfield, IL 62756
Credit services organizations must complete the application in its entirety, which includes the following information:
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- Name and address of the credit services organization
- Name and address of the authorized agent
- Name and address of all individuals who own 10% or more of the organization
- Name, phone number and address of the surety company who issued the applicant’s bond
- Full disclosure of any litigation with a government agency regarding the operation of a credit services organization
- Notarized statement there are no unresolved complaints with any government agency
Credit services organizations must pay a $100 filing fee when submitting their application.
What Are the Insurance Requirements for the Illinois Credit Services Organization Registration?
The State of Illinois does not require Credit Services Organization to obtain any form of liability insurance as a prerequisite to obtaining a registration. Credit services organizations who collect payment prior to the completion of services must purchase and maintain a $100,000 surety bond.
How Do Illinois Credit Services Organizations File Their Bond?
Credit services organizations should mail the completed bond form, including the power of attorney, to the following address:
Secretary of State
Index Department, 111 E. Monroe
Springfield, IL 62756
The credit services organization surety bond requires signatures from both the surety company that issues the bond and a representative from the credit services organization. The surety company should include the following information on the bond form:
- The bond’s premium rate
- Bond term
- Legal name and address of entity/individual(s) buying the bond
- Surety company’s name and address
What Can Credit Service Organizations in Illinois Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, credit service organizations must follow all license regulations in the state, including some of the most important issues below that tend to cause claims:
- Perform all services that have been paid for
- Do not engage in any acts of fraud
- Follow all registration requirements contained within the Credit Services Organizations Act
What Other Insurance Products Can Agents Offer Credit Services Organizations in Illinois?
Illinois does not require credit services organizations to obtain any form of liability insurance as a prerequisite to obtaining a business registration. However, many reputable businesses will seek to obtain this insurance anyway. Bonds are our only business at BondExchange, so we do not issue liability insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.
How Can Insurance Agents Prospect for Illinois Credit Services Organization Customers?
Illinois conveniently provides a public database to search for active credit services organizations in the state. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.
