What is LOQBOX?

Building on your credit history can be crucial in getting a good credit score. However, the problem is that you can’t even apply for most types of credit unless you have credit history. How can you get credit if you don’t have credit history which you can’t build without getting credit?

This is where credit builders come into play and one of the more prominent of these happens to be LOQBOX. However, it does beg the question: Will it really work? To answer that, it’s best that we go to the basics first.

What is Credit Building?

Credit building is an early strategy used by credit holders who have no history as far as their credit goes. Alternatively, it can be employed by those who got a poor credit score in their last report.

Credit building can be done in a number of ways. The most straightforward of these is applying as an authorized user for somebody else’s credit card . This because the transactions you make as one are often registered to your account. However, in connection to this topic, the one we’d focus on is loan-based credit building.

The way they work is simple. Instead of applying for the usual credit, they’d apply for a loan. However, credit building loans have a twist. Before you can even use that money, you’d have to pay a fee every month. Once you’ve reached a certain amount, then the loan will be released.

The advantage here is that every payment you make is going to be reported. Simply put, you are indirectly building a history of good payment. This should boost your score and should help you qualify for the most basic of loans in a few months. Of course, your ability to pay on time will matter as only on-time payments will be reported to the agency.

What Makes LOQBOX Different from other Credit Builders?

LOQBOX somewhat works like a savings account combined with a financing contract. This is where you have to divert the same amount of money to the account for the next 12 months.

How it works is quite simple: the applicant must first choose the amount of money they would want to pay every month. This could range from as little as £20.00 to as much as £200.00. The amount you choose is important as this will be your set monthly payment.

Over the course of a year, the applicant must then pay the monthly fee. Once the 12-month period is up, you can then either purchase adigital savings voucher or withdraw the entire amount.

If you do choose to withdraw, LOQBOX promises that no interest will be deducted from the total deposit. If you’ve been paying an amount such as £100.00 per month in LOQBOX, you are qualified to purchase a digital savings voucher worth £1,200.00 by the end of 12 months. Alternatively, you can choose to withdraw the same amount for whatever use you have in mind.

Now, this is where LOQBOX’s credit-building features come into play. Every deposit you make will be reported to the credit agency. So, a 12-month period of constant payments should be reflected as a short history of good credit behaviour on your part which should help in improving your overall credit score.

Pros

LOQBOX does offer a number of advantages not seen in other credit builders.

1. It’s Free

Sure, there is a monthly payment to be had here but it costs nothing to qualify for the program. Furthermore, the program won’t do a hard search if you apply for it which means that it won’t put a dent on your credit score just to get your own LOQBOX voucher. What the program only requires is for you to have a bank account which allows for direct debit payments set up as your primary account.

2. It’s Multipurpose

The way LOQBOX helps you is two-fold. First, it helps you develop sound financial management habits by forcing you to save up a considerable amount of money on a monthly basis. In time, you should at least develop the tendency to think twice before spending your money on something.
Second, every payment you are going to make for LOQBOX is going to be reported to the credit agency. This means every on-time payment is going to boost for your credit score. But what about when you miss a payment? That would be discussed later on.

3. Easy Cancellation

So what if you decided that you won’t continue on the 12-month program? LOQBOX will allow you to cancel on your program without a fee. Also, the money you have saved so far will be returned to you with no interest charge deduction at all. However, every payment you have made before the cancellation will still be reported to the agency which would still help on your score.

Cons

As with any other credit builder scheme out there, LOQBOX does feature some glaring drawbacks.

1. It Will Report EVERYTHING

The downside of LOQBOX reporting every transaction you make is that it can potentially make things worse for your score. If you miss a payment on LOQBOX, the program will report that delinquent payment to the agency which will then enter it as a derogatory mark on your history. This could mean that anyone who does a hard search on your account would see that mark and would know that you are not exactly consistent with your payments.

So, if you’ve missed two months on the program worth £100.00 each, LOQBOX would report two separate demerits to your account. Since negative marks stick forever in your history, every potential creditor will now be wary of doing business with you.

However, you can mitigate some of its worst effects by cancelling your account. The company will not report your missing payments provided that you do the cancellation a few weeks after your first missing payment.

2. Variable Credit Score Boost

LOQBOX’s effectiveness as a credit builder is directly tied to amount you pay for it every month. So if you’ve decided to go for the lowest amount at £20.00 per month, every payment you will do will still be reported to the agency but they are may not to do much in improving your score.

As such, it is best to use LOQBOX in tandem with another credit building tool if you are just going to opt for the lowest monthly payment price. However, it does still work as a saving account which means that you should at least £200.00 worth of money on your LOQBOX account in case of emergencies.

Are There Any Other Tools Out there Similar to LOQBOX?

Now, there is only one other contract financing program similar to LOQBOX and that would be Credit Improver. It works basically the same as LOQBOX with a 12-month payment program and a penalty-free cancellation option. However, where it differs is that Credit Improver gives owners the option to go for a 36-month payment program while monthly payments can go as low as £9.99.

Aside from this, your next best bet would be a typical credit builder credit card. These cards work similar to a credit card but functions more as a credit builder. The credit limits are generally smaller than your typical card and it might take a while before you can even unlock its most basic functions.
Also, their interest rates are higher than any other credit card as the ones issuing these credit builders would want to make sure that you really have what it takes to handle debt. A steep interest rate is often a good motivator for a person to pay their obligations as soon as possible after all.

The only upside with these credit builder cards are that they have generally lower application requirements than normal credit cards. As a matter of fact, you can avail of one whether you have no history of credit card payments or have a bad one.

In a Nutshell

So, does LOQBOX work as a credit building tool? Definitely. Every payment you make should contribute to the overall improvement of your credit score no matter how much you actually paid for it every month. Also, it’s no-strings-attached approach to cancellation can make it ideal for those what wish to switch to another credit builder mid-way.

As for the downsides, the program is not known for its leniency to delinquent payers and the boosts in your score are utterly dependent on the amount of money you’ve agreed to pay for your LOQBOX account every month. All things considered, it is best that you apply for a LOQBOX program only after you’ve carefully weighed in your options and decided that you’ve got what it takes to meet the strict demands.

Have you tried using LOQBOX before? How much did it help you build on your credit score? The comments section below is always open for all sorts of discussions.