Iowa Credit Services Organization Bond: A Comprehensive Guide

April 27, 2021

Iowa Credit Services Organization Bond

This guide provides information for insurance agents to help credit services organizations obtain Iowa Credit Services Organization Bonds

At a Glance:

  • Average Cost: Between $125 to $500 per year based on the applicant’s credit
  • Bond Amount: $10,000
  • Who Needs it: All credit services organizations operating in Iowa
  • 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 Iowa: The Iowa Secretary of State

Background

Iowa Statute 538A.5 requires all credit services organizations operating in the state to register with the Secretary of State. The Iowa 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 must purchase and maintain a $10,000 surety bond to be eligible for registration.

What is the Purpose of the Iowa Credit Services Organization Bond?

Iowa 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.

Iowa Credit Services Organization Bond

Iowa Credit Services Organization Bond

How Can an Insurance Agent Obtain an Iowa Credit Services Organization Surety Bond?

BondExchange makes obtaining an Iowa 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 Iowa 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 Iowa 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 Iowa Credit Services Organization Bond Cost?

The Iowa Credit Services Organization surety bond can cost anywhere between $125 to $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 $10,000 bond requirement.

$10,000 Credit Services Organization Bond Cost

Credit Score Bond Cost (1 year)
800+ $125
625 – 799 $150
575 – 624 $375
450 – 574 $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 Iowa Define “Credit Services Organization?”

Iowa Statute 538A.2 defines a credit services organization as any business entity that performs one or both of the following services:

  • Improves a buyer’s credit record, history, or rating
  • Provides advice or assistance to a buyer with regard to improving their credit record, history, or rating

How do Credit Services Organizations Apply for Registration in Iowa?

Credit services organizations in Iowa 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 – Credit services organizations are not required to renew their registration, however they must notify the Iowa Secretary of State within 19 days if any changes are made to their registration

Step 1 – Purchase a Surety Bond

Credit services organizations must purchase and maintain a $10,000 surety bond

Step 2 – Complete the Application

All Iowa Credit Services Organization Registration applications should be mailed to the following address:

Secretary of State
Credit Services Organization Registration
Lucas State Office Building, 1st Floor
Des Moines, Iowa 50319

Credit services organizations must complete the entire application, and pay a $50 application fee

Do Iowa Credit Services Organizations Need to Renew Their Registration?

No, credit services organizations are not required to renew their registration. However they must notify the Iowa Secretary of State within 19 days if any changes are made to their registration.

What Are the Insurance Requirements for the Iowa Credit Services Organization Registration?

The State of Iowa does not require credit services organizations to obtain any form of liability insurance as a prerequisite to obtaining a business registration. Credit services organizations must purchase and maintain a $10,000 surety bond.

How Do Iowa 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
Credit Services Organization Registration
Lucas State Office Building, 1st Floor
Des Moines, Iowa 50319

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:

  • Legal name of entity/individual(s) buying the bond
  • Surety company’s name
  • Date the bond is signed and goes into effect

What Can Iowa Credit Services Organizations Do to Avoid Claims Against Their Bond?

To avoid claims on their bond, credit services organizations in Iowa 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
  • Perform all agreed upon services to paying customers

What Other Insurance Products Can Agents Offer Credit Services Organizations in Iowa?

Iowa does not require credit services organizations to purchase any form of liability insurance as a prerequisite to obtaining a registration. 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 Iowa Credit Services Organization Customers?

Iowa conveniently provides a public database to search for active credit services organizations in the state. The database can be accessed here. Contact BondExchange for help developing a marketing piece. Agents can also leverage our print-mail relationships for discounted mailing services.

2021-04-27T19:23:02+00:00

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