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Credit repair services bond cost

In order to provide credit repair services in the state of Louisiana, applicants must first submit a $100,000 surety bond to the Attorney General’s Office.Due to the high bond amount and the fact that this bond has a 4-year tail, underwriters will take a very close look at the credit history of all the organization’s owners.

Applicants should also have financials prepared and available, as underwriters will often want to see those as well before approving credit repair service bonds. Applicants in good financial standing that have credit scores above 700 may be approved for as little as 1% of the total bond amount. So, a highly qualified applicant could pay just $1,000 per year for a $100,000 bond.

Why this bond

In 1996, the Credit Repair Organizations Act, or CROA, was signed into law with the intention of ensuring that credit repair companies were not harming consumers by using unfair business practices. Because of CROA’s enactment, it is the responsibility of the Louisiana Attorney General’s Office to verify that all credit service organizations have submitted a properly executed surety bond in the correct amount.

By providing a bond, the principal (credit service organization) guarantees to operate in compliance with the regulations established by LSA-R.S. 9:3573.4. Any damage incurred by the state or its residents as a result of the principal’s failure to abide by this statute will more than likely result in a claim against the organization’s bond, as long as the claim is brought up within 4 years of when the damage occurred. If necessary, the surety will pay up to the full amount of the bond, at which point it becomes the principal’s responsibility to reimburse the surety for all money paid.

How long do I need this bond

Credit repair organizations must keep an active bond for as long as they provide credit services to consumers, meaning that a premium must be paid annually in order for the surety to continue backing the bond.

In the event that the surety wishes to cancel the bond, they may do so by providing the attorney general’s office with at least 60 days’ written notice. Should the bond be canceled, it is important for the organization to find a surety willing to issue a new one. Continuing to offer credit repair services without a bond constitutes a violation of CROA and is punishable as both civil and criminal misconduct.

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