What is Loqbox?
Here's all you need to know about the credit builder tool
Loqbox was originally a financial paid-for service named ‘Credit Improver’ launched in 2012 to help consumers build credit scores. In 2017, the founders of Credit Improver, Tom Eyre and Gregor Mowat, decided to launch a free credit builder service called ‘Loqbox’.
To us, Loqbox is reminiscent of a legendary TV game show called ‘Take Your Pick’ where you could choose to ‘take the money or open the box’ - except with Loqbox, you ‘open the box to take the money’ and have your ‘pick’ of loans.
A Loqbox app is imminent, but at the time of writing this review (March 2021), the Loqbox credit builder tool is currently only web-based.
Loqbox has well over 3,000 Trustpilot reviews giving an overall ‘great’ rating of 4.2. Many 5 star Trustpilot reviewers seeking to increase credit scores state the service is a success and quick and easy to use, but other low rated reviews mention unexpected fees and a stagnant credit score.
Below is our very own Loqbox review to help you decide whether this credit builder service is something you want to try out for yourself.
What is Loqbox?
Loqbox is a free financial tool that claims to help build your credit score by storing monthly payments you make as savings, but in the eyes of the lending world, your ‘savings’ are classed as a ‘loan’.
By making monthly payments to your free (ambiguously named) ‘loan’, you are showing yourself to be creditworthy and easily able to make monthly payments on a loan. This favourable financial behaviour is then reported back to the 3 main credit reference agencies in the UK, thus (theoretically) improving your credit score.
You can ‘save’ as little as £20 per month for free and you can unlock your Loqbox savings (or loan) and have the funds accumulated paid into your nominated bank account. This can be done for free if you choose one of Loqbox’s trusted partner banks or for a fee of £30 if you want to receive payment to another bank account (i.e. that isn’t a trusted partner).
This is how Loqbox makes their money - they either receive payment from one of their partner banks for a customer opening a bank account with them or the customer pays a fee of £30 if they wish to have the money paid into a bank account who is one of their partner banks. This unanticipated £30 payment appears to have resulted in some negative reviews.
Loqbox is effectively a UK credit builder loan that you don’t pay interest on that helps increase your chances of being offered better rates by a wider variety of lenders than you would otherwise.
You might like: How to build your credit score with a credit card
Is Loqbox a credit card?
No - Loqbox isn’t a credit card, although using this financial tool could help you get one!
Loqbox is a financial savings tool where the money that you pay to Loqbox is saved, and your payments are perceived as ‘loan repayments’ in the eyes of lenders, thus making you look like a responsible borrower.
This responsible financial behaviour is reported to the three main credit reference agencies and should improve your credit rating and your chances of gaining access to more competitive credit cards, loans and mortgages.
Does Loqbox give you money?
Loqbox doesn’t give you any of their own money; they simply return your own money to you that you have paid to them. You can request your money be paid back to you at any time, although doing so too early (before 12 months) could affect your credit rating.
Learn more: What affects your credit score?
How does Loqbox work?
You decide on an amount you’re 100% certain you can afford to save in 12 months, Loqbox ‘locks away’ this sum as an interest-free loan, and you then pay back the 0% APR loan over a year, improving your credit score as you go.
Once your 0% loan is repaid (i.e. you have hit your savings target), you can then choose to have your accumulated savings paid back into a new bank account with one of their trusted partner banks or an existing bank account of your own choosing for a fee of £30.
Does Loqbox improve your credit score?
Loqbox can improve your credit score by reporting to the 3 main credit agencies that you have successfully paid back a 0% loan over the course of a year. However, they don’t loan you any money, you simply set up a direct debit to make payment to what is effectively a ‘digital piggy bank’ and your money is stored and released to you in due course.
But beware - if you miss a payment, you could harm your credit score.
What happens if you unlock your Loqbox?
Unlocking your Loqbox means all your funds will be transferred to either a partner bank of Loqbox for free or a bank of your choosing (who is not a partner of Loqbox) for a fee of £30.
Loqbox partner banks
Here is a list of the banks that Loqbox are currently partnered with (meaning you can transfer your 'savings' or 'loan' to them for free):
They may also offer free transfers to other banks, but they are not currently listed on the Loqbox website.
It is worth noting that the Loqbox website states:
"The banks we work with can change any time as new and better account options come on the market", so bear this in mind if you sign up to the credit builder tool.
Is Loqbox safe?
A Loqbox data breach was widely reported in February 2020 when a cyber-attack on their digital systems resulted in customers’ personal data being compromised.
However, although customers’ data was shared, their funds were not affected. Loqbox has, of course, since taken steps to improve its cybersecurity.
Also, your credit rating is only completely safe if you make all of your pre-agreed payments on time. Any missed payments will be treated exactly the same as a missed payment on a loan and this could impact your credit score - Loqbox reports missed payments to the credit reference agencies.
What if I can't afford to make a payment?
Rather than miss a payment, Loqbox recommends you immediately close (unlock) your funds if you know you are going to miss a payment. However, closing your Loqbox account and withdrawing funds early can also harm your credit score but not as much as a missed payment.