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Money expert reveals how to build up your credit score WITHOUT taking out a credit card
A MONEY expert has revealed how you can build up your credit score without having to get a credit card.
A better credit score can increase your chances of getting approved for a loan or mortgage - and even get you a cheaper interest rate when you borrow money.
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Kia Commodore shared the tip for improving your credit score in a video on TikTok, where she explained how to use a new type of credit building service called Loqbox.
You can improve your credit score by showing you can borrow money responsibly and pay it back on time.
This is commonly done using a credit card, but you have to spend money which can lead to debt and interest charges if you don't pay it off each month.
Ms Commodore said Loqbox is "like a savings account and credit builder in one" and that she "personally used, tried and tested" it herself.
The 23-year-old runs the account and is also behind a and podcast of the same name.
She explains in the video that Loqbox works like a loan you repay each month.
"Let's say I decide to make monthly deposits of £50," she said.
"That's £600 in total because you pay into Loqbox for a year. As I'm essentially paying back my loan, that helped improve my credit score, because I'm making regular and consistent payments.
"At the end of the 12 months the 'loan' is paid off and I get that money right back."
After initially being sceptical about Loqbox, she was assured by the company's work with several high street banks and checked that they are regulated by the Financial Conduct Authority (FCA).
Building your credit score without spending
Loqbox works by taking out a 0% loan for you, but locks it away so you don't actually get the money and you can't spend it.
When you repay the loan each month, Loqbox reports this to credit reference agencies.
In the UK that's Equifax, Experian and TransUnion, and in the US where it also operates in 40 states, that's Equifax and TransUnion.
Making these regular repayments on time can build your credit history and should make your credit score go up.
Because you don’t actually access the money from the loan, that cash is used to pay it back, and the money you are "repaying" is put into a saving account for you.
At the end of the 12 months, you've saved some cash and repaid a loan that can improve your credit score.
How to check your credit score
YOU see your credit report and score for a monthly fee with all three credit reference agencies: Equifax, Experian and TransUnion.
But there are ways to get it for free. It's important to regularly check your credit report to spot any errors that may make it harder to get decent finance deals.
- Equifax: You can for free for the first 30 days, after which it's £7.95 a month.
- Experian: You can check your score for free using its . But if you want to itself, you can only do this for free using a 30-day trial, after which you'll be charged £14.99 a month.
- TransUnion (formerly Call Credit): You can sign up to its for free to get unlimited access to your report and score for life.
You also have a legal right to request a statutory report on data that credit reference agencies hold on you but this won't include your score.
You can usually apply for this on a credit reference agency's website or by post for free.
Alternatively, you can check your credit score for free using the following third parties:
- ClearScore: ClearScore uses Equifax's data to .
- MoneySavingExpert.com: This tool uses Experian's data to
Your savings are protected in an independently verified, ring-fenced account with Barclays.
But you won't be protected by the Financial Services Compensation Scheme (FSCS) which protects individual's cash in accounts up to £85,000 if a bank were to go under.
When it's unlocked after a year, you get the money paid into a new bank account for free.
In the past this has included TSB, Starling Bank, RBS, NatWest, Shepherds Friendly and Pockit, but the accounts available can vary.
You can also to get the cash you've saved paid into a bank account you already have, but you'll have to pay £30 to do that.
It's not like a normal savings account though, and you won't earn interest on the money you've put away.
Ms Commodore told The Sun that she used Loqbox from January to December last year, putting away £50 each month.
By the end of the year she saved £600 and improved her credit score by around 100 to 150 points, but adds that there are other factors which can affect credit scores too.
"I already had a good credit score but wanted to make it as good as it could be," she said.
No magic fix for improving your credit score
In the video she also warns about the risks of not keeping up with repayments: "Remember, as it's credit, any missed payments will harm your credit score."
Loqbox says that it encourages all its users to complete the full 12 months and you can deposit between £20 and £200 each month.
But if you can't afford a payment you can "unlock" early by letting them know, and that means the loan will be repaid in full from the money locked away.
Missing a payment can harm your credit score, and unlocking early can too if you have not made enough regular payments.
Over a six month period LoqBox says users increase their credit score by 34 points.
Ms Commodore also warned that the there's no "magic potion" for fixing your credit score overnight.
"This will likely take six months to a year, so be patient," she said.
The money expert set up Pennies to Pounds in 2019 after graduating from University and now has thousands of followers on TikTok and other social media sites.
She set up the website to help others improve their finances and manage their money by budgeting, especially among young people, and has also appeared on the BBC.
"You're not taught this kind of stuff at school," she told The Sun.
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