The Maryland Department of Labor mandates credit service businesses to post a surety bond as part of the state's licensing requirements. This $50,000 credit services bond provides protection to the public should they suffer losses as a result of unlawful actions by your organization.
When you apply for a business license to operate a credit services organization (sometimes called a credit repair business) in Maryland, your application must be accompanied by a $50,000 surety bond. This bond is required by the licensing division of the Division of Financial Regulation of Maryland's Department of Labor.
The bond's purpose is to ensure that companies in the credit repair business comply with the Maryland Credit Services Businesses Act.
The state sets the bond amount at $50,000, and your annual premium will vary depending on your financial qualifications, such as personal credit history and business experience.
According to the Maryland Department of Labor, all new license applicants must begin the application process through the Nationwide Multistate Licensing System (NMLS). There you'll find helpful information including the MD Credit Services Business License New Application Checklist.
Application requirements include:
A surety bond is a binding legal contract among three entities, the principal (your credit service/repair company), the obligee (in this case the state of Maryland), and the surety (the insurance carrier underwriting the bond).
In the event that a claim is filed, the surety steps in to investigate. If the claim is upheld, the surety compensates the affected party and you must then repay that amount to the surety.