Depending on your credit worthiness as a corporation, business or contractor bidding on a job, your cost for a surety bond will be determined by your assets and your past performance of work completed. Another point to keep in mind if you are planning on bidding work that requires a surety bond is to develop a good relationship with an insurance agent who represents a company that has a list of companies who write surety bonds.
A surety bond is a short term letter of credit that you are paying a surety bond company to execute on your behalf; therefore, you need to be “credit worthy.” There are two basic reasons for maintaining a worthy credit. The first obvious reason, is to be able to find a surety bond company willing to give you a line of credit up to the contract sum of the project that you are bidding on. The second reason is to get a favorable quote about total cost that you may have to bear, in consequence, of extending credit reception from them.
You can pay as little as less than 1% of the total sum that the surety bond is written for or up to 3%. The decision is made by the surety bond company in conjunction with the insurance company that writes your insurance and usually based on their recommendation if you are pre qualified.