Loqbox review

Loqbox offers a unique, cost-free way to build or rebuild a positive credit history with all 3 UK credit reference agencies while you save.

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Loqbox

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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.

What is Loqbox?

If you decide to “buy” a Loqbox, you’ll set up a direct debit to save a regular amount each month. Loqbox cleverly treats these direct debits as finance repayments and each repayment is reported to a credit reference agency – showing lenders that you’re responsible with finance and boosting your chances of getting good deals on credit products. You can “unlock” your Loqbox at anytime to get all your money back and walk away.

Loqbox

Build your credit history while you save with Loqbox

  • Save from £20 to £200 a month
  • Build and improve your credit history
  • Once you’ve finished unlock your savings
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Video interview with Loqbox co-founder Gregor Mowat

How does Loqbox work?

  1. Choose to make regular monthly savings of anywhere between £20 and £200 over a year to “buy” a Loqbox. 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.
  2. Your monthly savings become repayments on a finance agreement. Instead of buying your Loqbox upfront, you’re using interest-free credit to pay for it over 12 months. Each repayment (effectively what you are saving each month) gets added to your credit history.
  3. You can then pull out at any time or let the 12 months run its course. If you change your mind, or think you might struggle to make a payment, you can “unlock” your Loqbox any time. You’ll get back everything you’ve paid in. This means you won’t have to miss any payments, which would in fact harm your credit rating.
  4. When you unlock your Loqbox and get all your money back (either after the 12 months are up, or sooner, if you decide to pull out), you’ll be asked to open a bank account or ISA with one of Loqbox’s partner banks for it to pay your money into. This is how Loqbox gets paid – earning a referral fee from its partners for bringing in new customers, which is in turn how it makes the service free for you. If you don’t want to do this, you can pay your savings into an existing account for a £30 charge.

Is Loqbox safe?

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).

Loqbox did experience a cyber-attack on 20 February 2020. While all Loqbox funds remained safe and the company functioned as normal, 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.”

Who is behind Loqbox?

Loqbox was founded in 2012 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.

What’s good or bad about Loqbox?

Pros

  • It’s free.
  • No credit check involved.
  • You’ll build up some savings.
  • It offers a boost to your credit score (if used correctly), so the next time you apply for credit, you’ll be in a stronger position. This could mean lower rates for you in the future.
  • You can pull out of the arrangement at any time and get all your money back.
  • Your funds are protected by the Financial Services Compensation Scheme (“FSCS“) up to the tune of £85,000.
  • Some credit-boosting services only report back to one credit reference agency, but Loqbox reports your payments back to the big three UK agencies: Experian, Equifax and TransUnion.
  • If you recommend a friend and they sign-up, you could earn yourself £5.

Cons

  • You’re saving, but without earning any interest.
  • If you miss a payment, you’ll actually damage your credit record.
  • At the time of writing, it’s not possible to move your monthly payment date (other than cancelling it altogether).
  • At the end of the 12 months you’ll end up with a new account that you might not have wanted, or alternatively you’ll incur a £30 fee.

You’ll also receive emails with expert tips on money management and how to continue saving. Pro or con? You decide.

Am I eligible for Loqbox?

Because there’s little risk involved, there aren’t many eligibility requirements. To be accepted you must:

  • Have a bank account which allows direct debits.
  • Have an email address, phone number and residential address.

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.

What is Loqbox Spend?

Loqbox has launched it’s new interest-free credit account – Loqbox Spend. Once signed up, Loqbox will open a line of credit with a limit based on your income, any money you spend and repay each month will be reported to the three main credit reference agencies and help grow your credit score.

What is Loqbox Rent?

This is a 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.

Our verdict: Is Loqbox any good?

The boost to your credit score and the fact that it’s free (if you go for Loqbox Free-unlock 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.

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 three main UK credit reference agencies.

Case study: Sam used Loqbox to build his credit

Sam Morgan profile pic
Sam Morgan

London

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'.

How does Loqbox compare?

Name Product Score Reports to Savings requirement Credit limit Fee How it works
Pave Plus
Finder rating
★★★★★
Experian, Equifax, TransUnion
N/A
Not specified
£9 per month
Build your credit score with all major Credit Reference Agencies by paying your membership fee on time. Subject to eligibility, Pave may open a credit line that you can use to top up your bank account periodically.
Pave Lite
Finder rating
★★★★★
TransUnion
N/A
N/A
£5 per month
Build your Experian credit score by paying your membership fee on time (reported to Experian as loan repayments).
Loqbox free
Finder rating
★★★★★
Experian, Equifax, TransUnion
£20 - £200 per month
N/A
£0
Decide how much you can save over 12 months and LOQBOX will handle each deposit as a payment on a 0% APR loan – helping build your credit score. Receive all your savings back into a new bank account for free.
Loxbox flexi
Finder rating
★★★★★
Experian, Equifax, TransUnion
£20 - £200 per month
N/A
£30 (one-off)
Decide how much you can save over 12 months and LOQBOX will handle each deposit as a payment on a 0% APR loan – helping build your credit score. Receive all your savings back into an existing account for £30.
Pave Spotlight
Finder rating
★★★★★
N/A
N/A
N/A
£3 (one-off)
Identify the best fixes for your score and check if Pave Plus could help you build credit.
Bits Basic
Finder rating
★★★★★
Experian, TransUnion
N/A
£48
£4 per month
Build your credit score with Experian by paying your monthly subscription fee. You can also opt into Bits’ “Rent reporting” service to start reporting your rent payments to Equifax.
Tymit Booster secured credit card
Finder rating
★★★★★
Experian
Not specified
Your credit limit will equal the cash deposit amount
£9.95 per month
Improve your credit score by making a cash deposit to get a credit limit of the same amount. Tymit will report your repayment behaviour to Experian each month.
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