If you stop paying BMG Money, the most immediate and significant consequence is a negative impact on your credit scores. Your payment history is reported to the three major credit reporting agencies, and failing to make payments will be reflected on your credit report, potentially lowering your scores.
Impact on Your Credit Score
BMG Money reports payment activity to all three major credit reporting agencies. When you miss payments or default on your loan, this negative information is added to your credit file. This can lead to a decrease in your credit scores, which can affect your ability to obtain future loans, credit cards, housing, and even employment.
Here are the primary credit reporting agencies that will receive information about your payment history:
| Credit Bureau | Impact |
|---|---|
| Experian | Reports on your payment history, affecting your credit score. |
| Equifax | Reports on your payment history, affecting your credit score. |
| TransUnion | Reports on your payment history, affecting your credit score. |
A low credit score can make it harder to qualify for favorable interest rates or even be approved for credit at all. For more information on how credit scores work and what impacts them, you can refer to resources from the Consumer Financial Protection Bureau.
It's important to note that loans marketed by BMG Money are primarily made by WebBank. However, as of December 8, 2023, loans to residents of Illinois, Ohio, and Rhode Island are made by BMG LoansAtWork, LLC. Regardless of the specific lender, the reporting of payment history to credit bureaus remains consistent.
Broader Financial Consequences
Beyond the direct impact on your credit score, stopping payments on a loan typically leads to several other financial repercussions:
- Late Fees and Accruing Interest: Loan agreements generally include clauses for late payment fees. Additionally, interest may continue to accrue on the outstanding balance, increasing the total amount you owe over time.
- Debt Collection Activity: If payments cease, BMG Money (or the originating lender) will likely initiate collection efforts. This can involve phone calls, letters, and emails attempting to recover the debt. If they are unsuccessful, your debt may be sold to a third-party debt collection agency, which will then pursue collection.
- Potential Legal Action: While typically a last resort for lenders, prolonged non-payment can lead to legal action. The lender or a debt collection agency may file a lawsuit against you to recover the outstanding balance. If they win, they could obtain a judgment that might allow them to garnish wages (where permissible by law) or place liens on property.
Avoiding these consequences is crucial for maintaining your financial health. If you are struggling to make payments, it is advisable to contact BMG Money or the loan originator directly to discuss your options before defaulting.
