North Carolina Credit Repair Services Bond: A Comprehensive Guide

July 14, 2021

North Carolina Credit Repair Services Bond

This guide provides information for insurance agents to their customers obtain North Carolina Credit Repair Services Bonds

At a Glance:

  • Average Cost: This bond generally costs between $100 to $750 per year based on the applicant’s credit
  • Bond Amount: $10,000
  • Who Needs it: All credit repair services organizations operating in North Carolina
  • Purpose: To ensure the public will receive compensation for any damages should the credit repair services organization engage in any acts of fraud
  • Who Regulates Credit Repair Services Organizations in North Carolina: The North Carolina Secretary of State

Background

The North Carolina Credit Repair Services Act requires all credit repair services organizations operating in the state to file a $10,000 surety bond with the Secretary of State. The North Carolina legislature enacted the bonding requirement to ensure that credit repair services organizations engage in ethical business practices. There are no statewide licensing or registration requirements for credit repair services organizations in North Carolina.

What is the Purpose of the North Carolina Credit Repair Services Bond?

North Carolina requires credit repair services organizations to purchase a surety bond prior to conducting business operations. The bond ensures that the public will receive compensation for financial harm if the credit organization fails to comply with the regulations set forth in the North Carolina Credit Repair Services Act. Specifically, the bond protects the public in the event the credit 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 organization acts unethically.

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How Can an Insurance Agent Obtain a North Carolina Credit Repair Services Bond?

BondExchange makes obtaining a North Carolina Credit Repair 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 North Carolina Credit Repair Services Bond?

Surety companies will run a credit check on the owners of the credit repair services organization to determine eligibility and pricing for the North Carolina Credit Repair 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 North Carolina Credit Repair Services Bond Cost?

The North Carolina Credit Repair Services Bond will typically cost anywhere between $100 to $750 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 of the $10,000 bond requirement.

$10,000 Credit Repair Services Bond Cost

Credit Score Bond Cost (1 year)
680+ $100
625 – 679 $150
575 – 624 $375
550 – 574 $500
500 – 549 $750

*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 North Carolina Define “Credit Repair Services Organization?”

The North Carolina Credit Repair Services Act defines a credit repair services organization as any business entity who provides one or more of the following services:

  • Improves, repairs, or corrects a consumer’s credit record, history, or rating
  • Obtains revolving charge card credit or retail installment credit
  • Provides advice or assistance to a consumer with regard to either of the above points

Exemptions to this definition include:

  • Any bank, credit union, or savings institution
  • Non-profit organizations
  • Licensed attorneys
  • Broker-dealers registered with the Securities and Exchange Commission or the Commodities Future Trading Commission

Do Credit Repair Services Organizations Need to Obtain a License?

No, credit repair services organizations are not required to obtain any state-wide license or registration. However, certain municipalities may require credit repair services organizations to obtain a tax receipt, permit, or local professional license. Credit repair services organizations should check with their local municipal authority regarding these requirements prior to conducting business.

What Are the Insurance Requirements for North Carolina Credit Repair Services Organizations?

North Carolina does not require credit repair services organizations to obtain any form of liability insurance as a prerequisite to conducting business operations. Credit repair services organizations must purchase and maintain a $10,000 surety bond.

How Do North Carolina Credit Repair Services Organizations File Their Bond?

Credit repair services organizations should mail the completed bond form, including the power of attorney, to the following address:

Secretary of State
Business Registration Division
PO Box 29525
Raleigh, NC 27626-0525

The credit repair services surety bond requires signatures from both the surety company that issues the bond and a representative from the credit repair 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 state of incorporation
  • Date the bond is signed
  • Date the bond goes into effect

What Can Credit Organizations Do to Avoid Claims Against their Bond?

To avoid claims against their bond, credit organizations in North Carolina must adhere to the following guidelines:

  • Do not lie to or advise consumers to lie about their credit history
  • Do not lie to obtain a credit history report
  • Do not misrepresent the services provided by the company
  • Do not ask for consumers to pay for services in advance

What Other Insurance Products Can Agents Offer Credit Organizations in North Carolina?

North Carolina does not require credit repair services organizations to purchase any form of liability insurance as a prerequisite to conducting business. 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 North Carolina Credit Organization Customers?

North Carolina unfortunately does not provide a public database to search for active credit repair services organizations in the state. We recommend contacting the office of the North Carolina Secretary of State or a list services company to obtain this information. Contact BondExchange for help developing a marketing piece. Agents can also leverage our print-mail relationships for discounted mailing services.

2022-05-19T10:39:55-04:00