In this brief blog, we are going to talk about Loqbox and the role of Loqbox in the credit repair market. If you are looking to build your credit score then Loqbox may be able to help you.

When looking to get any financial product, a major factor which many mortgage lenders, car loan lenders or personal loan lenders will consider before deciding if they will lend to you and at what rate is your credit score.

Your credit score plays a very significant role in your financial life. Your credit score determines the amount of credit a mortgage lender, a personal loan lender or a car finance lender may be willing to lend to you. Your credit score will affect the APR the lender will charge you on the credit. Your credit score may also affect your ability to rent a property or even get a job as most employees and landlords will like to look at your credit score to see if you have good credit behaviour.

Different credit providers will have their own internal credit scoring system. This means that whilst some credit providers will offer you credit based on your credit score there are credit providers out there that will not offer you credit.

Why is credit important in your financial life?

Credit is a very important factor in your financial life and financial wellbeing. Having suitable credit means you can borrow money at a suitable rate during financial emergencies.  Credit also allows us to be able to buy things and pay for them over time, this includes buying a property, a phone(we mostly have our phones on contract- this is a form of credit), buy clothes and even buying a car.

Credit will allow you to make investments which could potentially better your financial life. This means you could get a business loan or commercial loan to put into a suitable investment.

Credit also helps you build your credit score as the credit bureaus (Experian, crediva, call credit and Equifax) will want to see that some credit providers have given you credit in the past. Having credit will also allow you to show a good repayment behaviour as you make your monthly repayments such as a monthly mortgage repayment, a car finance repayment or a personal loan repayment.

If you fail to make your monthly repayments on credit then your credit score could be damaged and this could limit your ability to get credit again in the future.

What is Loqbox?

Loqbox is a creditbuilder company whoch offers credit building services. At the moment Loqbox only offers one credit builder product which is its, credit builder loan.

As of writing loqbox has an 8.2 out of 10 on Trustpilot on over seven hundred an eighteen reviews.

This means loqbox has a four star rating out of five possible stars.

What is a credit builder loan?

A credit builder loan is essentially a loan you take out and then make monthly repayments on which then appear on your credit profile as positive signals. On the other hand, if you fail to make your monthly repayments on your credit builder loan then this will reflect negatively on your credit score.

Credit builder loans are a bit more unique than described above. In fact, when you take out a credit builder loan, like the one offered by loqbox, you don’t actually get any money as an advance from loqbox or any similar credit builder company. Instead, you take out a loan which isn’t advanced to you but you have to make your monthly repayments until you have  repaid the loan in full. At the end of the loan term, all your monthly repayments are returned to you excluding any fees for the credit building service.

By using a credit builder such as loqbox you could potentially save thousands of pounds in interest on credit products such as credit cards, loans or a mortgage.

How does Loqbox work?

Loqbox works by providing you with a 0% loan which is locked away in your loqbox. You then have to pay off this loan within a 12-month period and as you make your monthly loan repayments a positive mark is added on your credit file and this should improve your credit score. 

At the end of the 12 months, loqbox will release all the money you have repaid into a new savings account.

When you start using loqbox you may notice a name “DDC Financial solutions” pop up a few times. You will certainly notice it on your bank statements. DDC financial solutions is the sister company to loqbox which loqbox uses to provide the interest-free loan which makes up your loqbox.

The money you pay to loqbox is safe as it is secured in a Barclays ring-fenced account. This means if Barclays or loqbox were to go bust your money will still be safe.

You choose the monthly amount which you are comfortable paying every month but loqbox may have a minimum amount of £20 which you must save. You cannot change the amount you save or repay per month into your loqbox as this amount is fixed. If you feelyou will struggle to repay this amount then you should contact loqbox and inform them of this. They may suggest you quit your loqbox or try to ensure you can pay this amount by moving your direct debit to the da after your payday.

Some frequently asked questions about Loqbox

Can I have more than one Loqbox?

You may be able to get more than one loqbox. To get more than 1 loqbox, simply log into your loqbox dashboard and inform the loqbox team that you want to have more than one loqbox if there isn’t an option to create a second loqbox .

How will loqbox make money?

Loqbox makes money at the end of the loan repayment period. They partner up with third-party banks which allow them to pay your savings into a new bank account which you have to open. This process may be a bit tedious and so loqbox now provides a Flexi option where they will pay your savings into an existing saving or current bank account for £30.

How will your credit score improve by using loqbox?

By using loqbox whenever you make those monthly loans repayments which are also known as savings into your loqbox, it will be noted as an on-time loan repayment on your credit file ( if you have made your repayments on time) and this will be marked as a positive indicator on your credit file which will improve your credit score.

If you find that you are unable to continue making your monthly loan repayments towards your loqbox then you should contact loqbox immediately and stop using your loqbox. You should do this because you risk having a missed payment on your credit file and a missed loan repayment on your credit file will be the exact opposite of what loqbox is about. When you quit your loqbox account you will simply have your outstanding interest free loan debt from DDC financial solutions marked as settles and all previous loan repayments you have made towards your loqbox released to you.

When will your score start improving after using loqbox?

When using loqbox your credit score may start improving after about four months. Loqbox requires a lot of patience. Things won’t magically happen when using loqbox and it is very important that you are patient as any improvements will take time to happen.

Credit reference agencies such as Crediva, Equifax, Experian and Transunion don’t report the 

When using your loqbox you may not initially see it registered on your credit file as this may take a month or two months before it starts appearing. If it still doesn’t appear after the second month then you may want to contact loqbox and inform them of this.

If you are not happy with the credit improvements you are seeing then you will be happy to know that you can unlock your loqbox at any point. Unlocking your loqbox in the first few months of you opening it may actually damage your credit score.

Does having a saving account help your credit score?

Having a savings account will not actually affect your credit score as the credit bureaus ( Crediva, equifax, Experian and Transunion) do not use this data to determine what your credit score will be.

What is a good credit score?

A good credit score will differ from each lender as they all have their own credit scoring criteria and this determines what sort of credit products they will be willing to offer you and at what rates.

Each credit bureau in the UK also has a different credit scoring mechanism and doesn’t use the same scale for their credit scores.

A good credit score will usually be anything above 400 from each credit bureau in the UK.

How can you build your credit score?

If you want to build your credit score then there are various things you should consider doing.

To build your credit score you should:

Get on the electoral roll
Open a bank account if you don’t have one
Open a credit account such as a bank account and leave it open for as long as possible
Avoid missing any monthly repayments
Get a credit builder card or credit-builder loan to show good repayment behaviours by making your monthly repayments on time.

Can lenders see your bank account?

No, lenders cannot see in your bank account but they can see that you have a bank account and any credit product such as an overdraft or credit card attached to your bank account. A lender will be able to see details of the credit product such as any outstanding balance or the total amount of credit but a lender won’t be able to see inside your bank account.

In this brief guide we discussed Loqbox, if you have any further questions or comments then please let us know below.

John Bate

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.