Loqbox is a digital solution designed for those of you who want to improve your credit score without getting into debt.
This Loqbox review is diving deep into what it is, how it works, and more importantly, if you should consider it.
It goes without saying but credit scores play a big part of our financial health and financial options.
I’m an advocate of everyone building a good credit score and want to help you do that, plus more!
Loqbox Review
There are many perks for getting a credit card to build your credit score, however this alternative method also solves your problem.
Loqbox offers the concept of building a credit score without any debt, which could be a game-changer.
What Is Loqbox
Loqbox is a solution that is created to help you to build your credit score without getting into debt.
You would do this through a monthly savings plan.
In their words: ‘build your credit score whilst you save’.
How does Loqbox work
Step 1: Save
You start off by deciding how much you want to save every month over a 12 month period.
You have the option to choose between £20 to £200 monthly payments.
This money is locked away in a ‘Loqbox’ as a 0% APR loan.
For instance, if you choose £20 per month, then you’re opting to lock away a 0% APR loan of £240.
Where is my money held?
The money technically goes to an account with Barclays, which makes it safe.
However, I doubt you could go into a Barclays branch and take the money out.
Loqbox is also authorised and regulated by the FCA — they are regulated as a bank.
Is it a loan?
The best I think of it is that it’s a backwards loan.
With a traditional loan, you would borrow money upfront then sign a contract to repay that money back over a period of time with interest.
Example:
You want to borrow £1,200 and pay it back over 1 year. The bank charges you 10% interest.
This makes your overall borrowed amount £1,200 + £120 (10% interest) = £1,320.
£1,320 ÷ 12 = £110. £110 is your monthly payments.
With Loqbox, you are taking out a loan on paper but not being given any money, hence why it’s 0% interest.
You then ‘repay’ that loan on paper over 12 months, and get the ‘borrowed’ money back after the 12 months.
Essentially it’s finessing the way loans work to be like a savings account, which then builds your credit.
Simply put, to you it’s a savings plan over 12 months. Behind the scenes it goes on your credit file as a loan.
Step 2: Growing your credit score
Over the 12 months, you pay the monthly amount, which is reported to credit reference agencies and forms your credit history.
A credit score is all about how good you are at paying back what you borrow, and the history of that account.
By history, I’m talking about whether you pay back on time every month and rapid the debt in time.
By paying your monthly Loqbox amounts every month, you are showing that you can pay back what you’ve borrowed (see the finesse?)
What if I want to skip a payment?
You have two options; pay the amount somehow or cancel the whole thing.
If you skip a month because this will be recorded on your credit file as a missed payment.
Missed payments go against you in terms of credit scoring so this defeats the purpose.
It’s better to cancel your Loqbox and get your money back than to miss a payment.
Step 3: Unlock your Loqbox
After the 12 months is up and you’ve kept up your payments, your money is unlocked and you choose how you want it back.
You can have the money back free of charge via Loqbox’s partners such as TSB, RBS and Natwest.
This means you choose which one of these you want to open a savings account with to get the money back.
If you wanted the money to go to one of your existing accounts you’ll be charged a £30 fee.
The choice of the partner saving accounts can be an instant access savings, meaning you can withdraw all your money from that account should you wish to.
Or, you can carry on saving money every month on the new savings account. A win-win situation!
Loqbox Points
Loqbox offers a points promise scheme which states that you will either grow your credit score or they will grow your savings. You can choose between 3 score schemes.
It’s almost like a guarantee that if your score does not increase they will compensate you for it via interest on your savings.
For example, their 50-Point Promise scheme says if your credit score does not grow by 50 points, then they will give you 5% interest on your savings.
This includes other perks like a free financial plan, early unlock option and jumping the queue for their customer support.
This 50-Point Promise scheme however costs £10 a month.
This monthly payment is deducted from your savings amount you chose in step 1, it’s not an additional amount on top.
Either way, for me £120 for a 50 point credit score increase is not too enticing.
But if you have a really low score it may be a benefit.
For some of you 50 points may be the difference you need to get a phone contract or a credit card.
The free version of the points scheme is the 10-Point Promise scheme where they offer 1% interest if your score does not increase by 10 points, and comes with a free financial plan.
Leaving Loqbox
You can opt out of Loqbox anytime.
You get your money back and the account is closed as settled in your credit file and you don’t owe anything.
Keep in mind that it can take up to 6 months to see any changes in your credit file so if you opt-out earlier than that you may not see any benefits on your credit score.
Is Loqbox Worth it?
I’ll be honest I really like this!
Being able to build your credit score without getting into debt is a game changer.
What I like about Loqbox:
- It’s completely free
- Allows you to improve your credit score debt-free
- Although it’s technically a loan on paper, from your perspective it’s like a savings
- Regulated by the FCA and partnership with Barclays — where your money is held
What I don’t like about Loqbox:
- Paying £30 to get money to your account (but there are options)
- Can’t amend the monthly amounts
- No interest on your savings (but the trade-off is an improved credit score)
I’ll always advocate having a good handle on your budget before getting a credit card to improve credit to avoid getting into debt!
This option helps you do that without getting a credit. But remember, budgeting is still important!
Worst-case scenario
If you can’t afford the payments anymore you can cancel it and walk away with no debt (don’t miss payments).
If your credit score does not improve by at least 10 points you’ll at least get 1% interest back (if you opt for the points promise).
Points to remember:
- Sign up what you can comfortably afford between £20 and £200 per month over 1 year
- You can at least opt for the free 10-point promise scheme
- As long as you don’t miss payments you’ll be fine
- You’re building your credit score with no debt
- After 1 year, you get your money back
Loqbox Alternatives
This Loqbox review has revealed a lot but some of you might be sceptical.
Well, there’s another company that provides a similar service called Bits, read our review to find out more.
Alternatively, the traditional route is to get a credit card.
There are other ways to improve your credit score.
Take Action
What are your thoughts based on this Loqbox review?
If you’re looking to improve your credit score, at least check out Loqbox.
Whatever you’re thinking of doing to build your credit score, do it now! Don’t delay.
Share this with your friend, family, or partner and start helping each other to build your credit score.
Let us know how you’re getting along by getting in touch with us, we’d love to hear from you
Knowledge is powerless without action
So take action, and take care
Thando