Utah Credit Services Bond: A Comprehensive Guide
August 27, 2021
This guide provides information for insurance agents to help their customers obtain Utah Credit Services Bonds
At a Glance:
- Average Cost: Between $1,000 to $5,000 per year based on the applicant’s credit
- Bond Amount: $100,000
- Who Needs it: All credit services organizations operating in Utah
- Purpose: To ensure the public will receive compensation for any damages should the credit services organization fail to comply with registration law
- Who Regulates Credit Services Organizations In Utah: The Utah Department of Commerce
Background
Utah statute 13-21-3.5 requires all credit services organizations operating in the state to register with the Department of Commerce. The Utah legislature enacted the registration laws and regulations to ensure that credit services organizations engage in ethical business practices. To provide financial security for the enforcement of the registration law, credit services organizations must purchase and maintain a $100,000 surety bond to be eligible for licensure.
What is the Purpose of the Utah Credit Services Bond?
Utah 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 regulations set forth in the Utah Credit Services Organization Act. Specifically, the bond protects the public in the event the credit services organization engages in any acts of fraud or breaches any contracts made with consumers. In short, the bond is a type of insurance that protects the public if the credit services organization breaks licensing laws.
How Can an Insurance Agent Obtain a Utah Credit Services Surety Bond?
BondExchange makes obtaining a Utah Credit Services 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 Utah Credit Services Bond?
Surety companies will run a credit check on the owners of the credit services organization to determine eligibility and pricing for the Utah Credit Services bond. Owners 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 Utah Credit Services Bond Cost?
The Utah Credit Services surety bond can cost anywhere between $1,000 to $5,000 per year. Insurance companies determine the rate based on several 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 Bond Cost
| Credit Score | Bond Cost (1 year) |
|---|---|
| 800+ | $1,000 |
| 625 – 799 | $1,500 |
| 575 – 624 | $3,750 |
| 450 – 574 | $5,000 |
How Does Utah Define “Credit Services Business?”
Utah statute 13-21-2. defines a credit services business as any business entity that provides one or more of the following services:
- Improves a consumer’s credit record, history, or rating
- Creates debt reduction or debt management plans for consumers
Exemptions to this definition include:
- Businesses authorized to make loans or extensions of credit
- Financial institutions whose deposits are eligible for insurance by any credit union
- Principal brokers licensed under the Real Estate Licensing and Practices Act
- Licensed attorneys
- Broker-dealers registered with the Securities and Exchange Commission or the Commodity Futures Trading Commission
- Credit reporting agencies
- Individuals licensed under the Uniform Debt Management Services Act
How do Credit Services Organizations Apply for a Registration in Utah?
Credit services organizations in Utah must navigate several steps to secure their registration. Below are the general guidelines, but applicants should refer to the application form for details on the process.
Registration Period – The Utah Credit Services Registration is valid for one year from the date of issuance and must be renewed before the expiration date
Step 1 – Purchase a Surety Bond
Credit services organizations must purchase and maintain a $100,000 surety bond
Step 2 – Complete the Application
All Utah Credit Services Organization registration applications can be completed online here. Applicants must complete the application in its entirety, and submit the following items:
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- Sample written information statement provided to consumers
- Sample contract disclosure form
Credit services organizations must pay a $250 fee when submitting their application.
How Do Utah Credit Services Organizations Renew Their Registration?
Credit services organizations can renew their registration online here. All renewal applicants must pay a $250 fee. The Utah Credit Services Registration is valid for one year from the date of issuance and must be renewed before the expiration date.
What Are the Insurance Requirements for the Utah Credit Services Organization Registration?
Utah does not require credit services organizations to obtain any form of liability insurance as a prerequisite to obtaining a business license. Credit services businesses must purchase and maintain a $100,000 surety bond.
How Do Utah Credit Services Organizations File Their Bond?
Credit services organizations should submit the completed bond form, including the power of attorney, electronically here. The 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:
- Legal name of entity/individual(s) buying the bond
- Surety company’s name and state of incorporation
- Bond amount
- Date the bond goes into effect
- Date the bond is signed
What Can Utah Credit Services Organizations Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, credit services organizations in Utah must follow all registration regulations in the state, including some of the most important issues below that, tend to cause claims:
- Do not engage in any acts of fraud
- Do not breach any contracts made with consumers
What Other Insurance Products Can Agents Offer Credit Services Organizations in Utah?
Utah does not require credit services organizations to purchase any form of liability insurance as a prerequisite to obtaining a license. However, most 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 Utah Credit Services Organization Customers?
Utah 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.
