Is it a loan? Is it a savings account? Well, it’s both – so you’re forgiven for getting confused. We’ll try to cut through some of the confusion surrounding this innovative credit builder.
When you choose to “buy” a Loqbox membership, you’ll set up a direct debit to save a set amount each month. These direct debits are cleverly treated as finance repayments, which are reported to credit reference agencies – demonstrating your financial responsibility to lenders and improving your chances of securing favourable credit deals. You can “unlock” your Loqbox anytime, withdraw all your savings, and end your membership.
Loqbox offers a variety of tools that aim to help boost your credit score and build (or rebuild) a positive credit history. Loqbox also provides guidance and financial education through its “Learn” tool.
Once you have chosen a Loqbox membership that works for you, you can explore the tools available for your membership.
Loqbox Save is the original credit-building tool offered by Loqbox, doing exactly what it says on the tin: helping you build credit while you save.
Here’s how it works:
This is Loqbox’s credit building product that reports your regular rent payments to credit reference agency Experian, granted that you pay your rent on time each month.
Once you connect your bank account to your Loqbox account, Loqbox will then identify your rent payments and report them, helping build your creditworthiness.
Loqbox Grow is an interest-free credit account available to those with a Full Loqbox Membership. Loqbox reports your monthly membership payments to the credit reference agencies to help build your credit history.
Used responsibly, you could see an improvement to your credit score of “125 points in the first six months on average”.
Available to both memberships, Loqbox Coach and Loqbox Learn offer free personalised financial guidance and educational resources to improve your financial literacy and make smarter financial choices.
Loqbox offers 2 membership options to help its customers achieve their financial goals, here are some key differences:
| Loqbox Lite | Full Loqbox Membership | |
|---|---|---|
| Cost | Free | £2.50 per week or £99 per year |
| Savings Transfer | Requires partner bank account (or pay £30 to transfer to an exisiting account) | Transfer to any account for free |
| Available tools | ||
| Potential savings | Up to “£240” over 12 months | Up to “£528” over 12 months |
| Potential credit score boost | Up to “145 points” over 12 months | Up to “200 points” over 12 months |
| Extra Tools | N/A |
|
You can sign up online in under five minutes and have your Loqbox account open in another five minutes, and you won’t be subjected to a credit check.
Loqbox is authorised and regulated by the Financial Conduct Authority (FCA). Any money you put into your Loqbox is protected (albeit in a roundabout way) by the Financial Services Compensation Scheme (FSCS) and is held in a dedicated client account, away from Loqbox’s own funds.
Following a cyber-attack on 20 February 2020, Loqbox has implemented enhanced protocols to protect client data. While all Loqbox funds remained safe and the company functioned as normal during this cyber attack, some of its customers’ personal information was likely to have been compromised.
You may also be the target of phishing scams, but Loqbox will never contact you to ask for your full bank or card details. If you receive a call, text or email from someone claiming to be from Loqbox and asking for your financial information, do not give them your details.
Matt Cochrane of Loqbox told us: “Your money is held in a ring-fenced, designated client account with Barclays, meaning it’s totally safe – so even if Barclays and Loqbox both went bust (they won’t) you are protected.”
Loqbox was founded in 2017 by Tom Eyre and Gregor Mowat with the mission to help people who have found themselves excluded from accessing fairly priced credit either because they are young with little or no credit history, or because they have made past credit mistakes.
It’s worth noting that Loqbox isn’t actually a lender – it acts as an “introducer”. Credit is provided by DDC Financial Solutions. If you take out a Loqbox, you are effectively accepting a finance agreement from DDC financial solutions. Your monthly savings are the repayments on that agreement, which will build up your credit history over time. The finance that DDC provides has no charges or interest, essentially making it a cost-free way to improve your credit rating. So what’s the catch? At the end of the term, you must be prepared to open an account ot ISA with one of Loqbox’s partner banks, or pay a fee to transfer to one of your existing accounts.
Loqbox is authorised and regulated by the Financial Conduct Authority.
Because there’s little risk involved, there aren’t many eligibility requirements. To be accepted you must:
For the Loqbox Lite membership, you must also be willing to open a savings account or ISA with one of Loqbox’s partner banks, or otherwise be willing to pay a £30 fee. If you have made 26 weekly payments, this fee is waived for those with a Full Loqbox Membership.
The boost to your credit score and the fact that it’s free (if you go for Loqbox Lite and open an account with a Loqbox partner) make it easy to look past Loqbox’s flaws. For people looking to access a loan right now, Loqbox isn’t the answer. But if you’re serious about building a positive credit history and accessing lower rates in the not-too-distant future, we think Loqbox is a smart choice. Plus, if you’re willing to pay a fee, Loqbox offers a paid membership with access to more credit-building tools.
Other companies have started to copy Loqbox (check out Pave, Bits and Tymit Booster) – which is always a good sign. But Loqbox is still out in front due to its pricing and the fact that it reports to all 3 main UK credit reference agencies.
"Coming out of uni, I used Loqbox to build my credit. You only have to pay in £20 or £30 a month. It’s a really good way to build credit up. It has lots of advice on building credit and gives you a good education about improving your credit rating. The app is really good, really well branded and easy to use.
I withdrew my money at the end of the year. The charge was very clear. I was a bit sceptical about how they make money, so I read the T&Cs first and was aware of the charge.
If there’s one thing you’d tell a friend who’s thinking of getting this, what would it be?
If you’re someone who isn’t very good at building credit or not particularly educated around finance, Loqbox is a really good thing to use. I got a lot out of the educational side of it. Learning how to use credit was the real benefit of it.
My credit rating improved around 30/40 points (on Experian) with Loqbox. But I would say the overall impact was around 100 points because of my attitude going forwards. My credit score improved from ‘Poor’ to ‘OK’."
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