LOQBOX is a financial service designed to improve your credit score which is achieved by just saving an amount of money every month with no fees whatsoever. This is pretty a good one, you can trust me on this!
Prior to this, the popular suggestion was that people with low credit scores should get a “bad credit card”, use it every month and completely repay it each month.
This works well if you can stick to the strategy; however, its like walking along a thin wire or rope. The lenders like that because it shows that you are good at balancing, but if you default in the payment, you are stuck with debt at an extortionate rate.
Therefore it’s worth looking for an option that is less risky and that also allows people to save.
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HOW DOES LOQBOX WORK?
The first step is to SIGNUP with LOQBOX. There is no credit checking at all. Even if you are bankrupted or just finished an IVA, you will not be refused. You determine how much you can save for a year each month. This will be money you will not get until the end of the year. You can select any amount from £ 20 to £ 500 – for this article, I will use £ 40 as an example.
If you are uncertain about how much you want to save every month, look for a number that you can afford every month for a year. You are then set up with your LOXBOX worth 12 times your monthly payment. Think of it as buying a box with £480 in it… but you have paid for this box by taking an interest-free loan of £480 for a year.
IF ALL GOES WELL
LOQBOX receives your monthly payments from your bank account through direct debit. You can pick any payment date. It’s a smart idea to do so on or immediately after your payday, which means that you never see the money sitting in your bank account tempting you to spend it!
Each monthly payment is used to pay the next installment of the loan:
- after 1 month you have paid in £40, your savings. At the same time, £40 of the money in your LOQBOX is used to repay the first month of your loan, so there is only £440 left in the LOQBOX;
- by the end of the year, you have saved £480, cleared up the 12 months loan repayments and left nothing at the LOQBOX.
Experian, Equifax and TransUnion (the new name for Call Credit) track these regular loan repayments so that they appear on your credit reports. When you return these loans on time, your credit record looks good and your credit score increases.
HOW TO GET YOUR SAVINGS BACK
LOQBOX recommends that you pick some new accounts, including current accounts, ISA (tax-free) accounts and other savings accounts after your last deposit. If you open one of these, LOQBOX gets paid a referral Fee; this is how they make their money and provide their service free of charge.
You can move your money into it if you open one of these suggested accounts. If you would continue your saving habit, it would be a smart idea, but they’re all easy-to-access accounts, and you can cash out your money directly if you wish.
However, if you do not wish to use one of these accounts, LOQBOX may move the funds to your current account minus £ 30 for using what is known as ‘Flexi Unlock’ – this charge is a replacement for the referral fee that would have gone to them if you had opened one of the new accounts that they offer.
If you can’t open an account because you are rejected, then LOQBOX won’t charge you this £30 and your savings are returned to your bank account in full.
AND IF THINGS DON’T GO WELL
If after a few months you realised you can’t afford your next payment, or if you just want to get the money you have saved back, all you have to do is to contact LOQBOX.
Say you have made the first 5 months payments of £40 so you have saved £200. Your loan is now down to 480 – 200 = £280 and your LOQBOX still have £280 in it. So the LOQBOX £280 will be used to repay the rest of the loan and you can get your savings – the £200 – back.
Since you did not default on the loan, your credit record will not be affected. But the loans will have done your credit score less good than if you had carried on to the end. Taking on any new credit negatively affects your credit score for the first few months, so if you stop saving very quickly you may not have benefited at all.
IT ONLY GOES BADLY IF YOU IGNORE IT
The only way LOQBOX will negatively affect your credit record is if your direct debit is denied. You won’t have a problem if you tell LOQBOX before this and ask them to refund your savings.
CAN I TRUST A FIRM I HAVE NEVER HEARD OF?
LOQBOX is an Appointed Representative of Credit Improver Limited, which is approved and regulated by the Financial Conduct Authority. Your monthly deposits are held in a secured, client account with Lloyds Bank. If LOQBOX goes into a financial difficulty period, your savings in this account is protected and cannot be used to pay any LOQBOX company’s debts.
HOW MUCH WILL YOUR CREDIT SCORE IMPROVE?
This is a tough question to answer since it also relies on your existing credit record. But for instance, with a monthly payment of £40, you will have the same effect on your credit score similar to if you had borrowed £480 and repay over a year.
Do you want to set-up your LOQBOX and start saving, SIGN UP HERE