LOQBOX is an innovative solution that uses monthly savings to build credit history and boost credit scores. Our LOQBOX review will give you the pros and cons and help you decide if this product is right for you.
LOQBOX launched in the UK in 2017 and opened to US consumers in 40 states in September 2020. It’s similar to a credit-builder loan, but there’s no interest. If you release your savings into a new account with a partner bank you won’t even pay any fees: LOQBOX makes its money from a commission paid by the partner bank.
LOQBOX Credit Builder Review & Ratings
LOQBOX is available with no credit check and a few other requirements. It’s one of the cheapest credit building options out there: it can be free if you open an account with a LOQBOX partner bank at the close of the loan term. They report to Eqifax and TransUnion, but not Experian.
No Interest with a no-fee option
Lump sum at end of term builds savings
FDIC-insured account for security
Can access funds at any time
Easy approval with no credit check
$40 charge if you deposit funds to your existing bank account
Doesn't report to Experian
No interest paid on savings
Missed or late payments will hurt your credit
LOQBOX looks like a solid, reliable, and debt-free credit building solution. It’s secure, the cost is low, and it can be combined with other credit-building strategies for an even faster credit boost.
It’s still a relatively new service in the US, so it remains difficult to assess effectiveness or customer service.
How Does LOQBOX Work?
The service works like a credit-builder loan, with some differences. Instead of applying for a specified loan amount with a monthly payment fixed by the lender, you set a savings target for the year. LOQBOX puts that money in a secure account, and you pay it off in installments.
LOQBOX reports your payments to Equifax and Experian, building your credit, and when the amount is paid up you get the money, which builds your savings.
If you withdraw the sum to your own bank account, you’ll pay a $40 fee. If you set up an account with a LOQBOX partner bank and draw the sum into that account, the entire process will be absolutely free.
As the name implies, your account acts like a locked box to protect your savings while building credit. At the end of a 12-month period, you can unlock your account and access the savings. You can unlock early without penalty. LOQBOX is easy to set up in a few minutes. There’s no interest, no hidden fees, and there’s no credit check.
You can select any monthly payment between $20 and $200 (in $5 increments). The sum you withdraw at the end of the year will be from $240 to $2,400.
Suppose you decide to save $100 a month. You’ll get a 0% APR loan for $1,200. You’ll receive a cash-redeemable voucher.
Each month, you’ll pay $100. You can make the monthly payments either by direct debit from your bank account or by debit card payments.
LOQBOX reports these monthly on-time payments to two of the three main credit bureaus: Equifax and Transunion. This builds credit history and payment history, as long as you don’t miss a payment or make a late payment.
👉 At the end of each 12-month period, you have the choice to transfer your funds to one of LOQBOX’s partner savings accounts, or to your personal checking or savings account for a $40 fee. You can withdraw early without penalty.
How is LOQBOX Different From a Loan?
LOQBOX is different from a loan in several respects. A few key differences are:
- No credit checks
- No interest
You do not receive the cash value of a loan. Instead, you buy a cash redeemable saving voucher and finance the purchase with a loan.
Here are some of the key features of LOQBOX.
LOQBOX reports payments monthly. The initial loan might lead to a temporary credit score dip: this often happens when you first open a new credit account. You should see improvements in your credit score within three to four months.
You can save between $20 and $200 per month. That means the maximum 12-month savings limit is $2400 and the minimum is $240.
If you choose to unlock early, you will receive everything you have saved until that point. You can choose to open a new savings account with one of LOQBOX’s list of partners or use the Flexi Unlock feature ($40) to have the funds transferred to any bank account.
👉 If you unlock within the first 3-4 months you will probably not see a noticeable improvement in your credit.
LOQBOX will report late payments, which can hurt your credit. The Company recommends that if you’re having trouble making payments, you should close your account and withdraw your money. You won’t get the full credit-building benefit, but late payments will hurt more than keeping the account open will help.
When you sign up, you can select any payment date for the monthly automatic account deduction or debit payment. Choose this date carefully, as you will not be allowed to change and any late payments will hurt your credit score. After the first month, you can change the payment date within the same calendar month, as long as it is not in the past.
As with any credit-building product. LOQBX reviews cannot be taken as an absolute indicator, either positive or negative. Many negative reviews of credit-building products indicate a poor understanding of the service, its limitations, or the realities of building credit. Some companies may also seed positive reviews.
Within those constraints, how does LOQBOX look in the review process?
👉 Because the service is quite new in the USA, most online reviews are from the UK. The UK reviews, with the largest number hosted on Trustpilot, are generally good. The Company gets an average of 4.3 out of 5 stars from 5,298 reviews.
In the US reviews are less impressive, though the number of reviews is too small to reach any clear conclusion. While the company has an A rating from the BBB, there are seven complaints on the BBB page, mainly dealing with unauthorized withdrawals and communication issues. The Company has responded to all of the complaints and in some cases, the issues do not appear to be entirely with the Company.
👉 At this point, we’d say that there are not enough LOQBOX reviews from US customers to reach a conclusion about the Company.
LOQBOX vs Self
Self credit-building loans work on the same principle as LOQBOX. You are approved for a loan amount between $520 and $1,663, and you make monthly payments until that loan amount is paid in full. You don’t receive any cash, but build savings to cover the loan. After the designated savings period, the funds are transferred to your bank account.
While the credit-building formula is similar, there are key differences to be aware of. Here is our Self vs. LOQBOX review:
LOQBOX doesn’t charge any fees for their basic service, while Self does.
Self’s fees are:
- $9 administrative fee for account setup.
- $0.30 + 2.99% convenience fee for payments by debit card. On $100, that would be $3.29.
- Maximum early account closing fee of $5.
👉 In contrast, LOQBOX charges a fee of $40 only if you choose to deposit the funds into a bank account that is not one of their savings partners. Even if you unlock early, you can do it fee-free by opening an account with a partner bank.
While neither Self nor LOQBOX perform a hard inquiry credit check, Self partners with ChexSystem to determine eligibility and to access banking history. Self states that they don’t turn down applicants based only on credit scores, but that implies that credit scores could contribute to a decision to turn down applicants.
LOQBOX does not perform any credit check and doesn’t turn down customers based on credit score.
Length of Savings Period
With Self, you can choose between 12-months or 24-months repayment options on the “loan”. With LOQBOX, at present, there is only a 12-month option. You can, of course, choose to take a second 12-month LOQBOX to extend the 12 months to a 24-month period.
Monthly Payment Amounts
Self gives you four different monthly payment options: $25, $35, $48, or $150. In contrast, LOQBOX lets you select any monthly payment amount between $20 and $200 in $5 increments.
Self is available in all 50 states, while LOQBOX is only available in 40 states. The service is not available in California, Delaware, Indiana, Louisiana, Mississippi, Missouri, Nevada, North Dakota, Rhode Island, or South Dakota.
Credit Burerau Reporting
Self reports to all three credit bureaus, while LOQBOX reports to only two.
If you notice a dip in your credit score after opening LOQBOX, this is normal for many consumers. As you make regular monthly payments, you should see your credit score recover and then start to increase within 3-4 months.
When you unlock LOQBOX, the funds will be transferred to a new savings account opened with one of the LOQBOX partners, or to a designated bank account with the Flexi Unlock option. Unlocking LOQBOX early will not directly harm your credit score, although you will also lose the credit-boosting benefits of the monthly LOQBOX payment reports to the credit bureaus.
LOQBOX reports to Equifax and TransUnion. Your Experian credit report and credit scores will not be affected.
LOQBOX says they make redemption payments the next working day after you unlock. You can see the funds in your account by the end of the next working day, but it might take up to three business days for the funds to appear in some bank accounts.
In the UK LOQBOX offers a “points promise” package, which will pay you interest on your savings if your credit score fails to improve by a specified amount. The US site does not mention a similar program and we assume that it is not offered in the US.