Impact of Credit Rating When Applying For Bonding
There are many positions that require an employee or independent contractor to be bonded. These jobs include bank tellers, cashiers, stock market employees and those who are contracting on construction jobs. There are also organizations such as Lions Clubs, Rotary Clubs, etc. that require bonding for specific positions such as Club Treasurer, District or State Treasurers and other positions. The various types of bonds can be confusing and often can make people wonder can I be bonded if I file bankruptcy. There is no simple answer to this question as it depends largely on whether it is a new bond or a renewed bond; it may also vary depending on the type of bond.
A surety bond is issued by an insurance company and states that the company is insuring a third party against malfeasance of the contractor. These types of bonds are typically used by construction companies, banks, broker dealers and other similar institutions. These bonds are also required on large projects such as road construction, bridge building and other municipal work sites.
Generally, a surety bond for an independent contractor may involve review of the contractor's credit history. In this case, there is a high likelihood that an independent contractor with a criminal record or with a prior bankruptcy would be unable to secure a surety bond. However, if the surety bond is being drawn by a company where someone is classified as an employee, chances are that the company will take out a blanket surety bond on all employees. In this case, the surety company is more interested in the credit standing of the company than the individuals.
A fidelity bond protects an employer. These bonds are typically used to protect against typical white collar crimes such as theft, emblezzelment or other forms of malfeasance. Generally, these bonds may also be obtained by those seeking employment who have prior "bad acts" that may prevent them from landing a job.
A fidelity bond is known as a "dishonesty bond" and is designed to protect employers from loss. Because this type of bonding can be a barrier to employment, the Department of Labor offers a bonding program designed for "high risk" employees. This program allows employees - who may not have been able to secure a fidelity bond due to their background - the necessary bond coverage for six months.