Loqbox review

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.

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.

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.”

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.

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.

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.

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.