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How does the Reward Loan work?

The world’s first dynamic loan is here. We’re here to walk you through the Reward Loan, how it works and whether it could be right for you.

14 December 2018Frankie Jones 3 min read

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The world’s first dynamic loan is here. LiveLend have partnered with us to launch the ‘Reward Loan’, a personal loan where the rate you pay reduces as your credit score improves. We’re here to walk you through the loan, how it works and whether it could be right for you.

What is it?

It’s a rate-reducing APR loan that’s exclusive to ClearScore. A while ago, LiveLend spotted a problem in the lending market: borrowers who wanted to grow their credit history weren’t being rewarded for their good behaviour. They set about to change this, which is how the Reward Loan was born.

How does it work?

Once you’ve taken out the loan, LiveLend will check your credit score every three months to see if there’s been a change. (This check won’t affect your score, don’t worry.)

If it’s increased by 25 points or more, they’ll reduce your loan rate by 2%. There's no limit to how many reductions you can earn, so if your score increases by 100 points over a three month period, your APR will drop by 8%.

Your APR could go all the way down to 7.9%, if you’re lucky. So if you’re planning to take out a long-term loan, you could save money in interest fees while you pay it off.

And once they’ve dropped your loan rate, it won’t go back up - even if your credit score goes down! Even if your score never goes up, but drops instead, LiveLend won’t increase your loan rate. It’ll just stay the same. Basically, your rate can never go up: it’s all reward, no punishment.

You can borrow up to £15,000 with the Reward Loan, and personalised Annual Percentage Rates (APRs) range from 9.9% to 36.7%. They’ll also tell you the APR you’ll be offered when you get a quote, (they’re doing away with confusing representative rates), so you know exactly how much the loan will cost you.

Is it for me?

Firstly, you need to meet certain criteria to be eligible to take out the Reward Loan. You must:

  • Be at least 18 years old
  • Be a UK resident
  • Be employed, self-employed or retired with a pension
  • Have an income of at least £12,000 per year (before tax)
  • Have a credit history that we can see, and a good track record of repaying debt
  • Be able to afford the loan

If you fit the bill so far, fantastic. Now let’s look at the statistics. LiveLend have estimated that one in four people who take out the loan will see their rate reduce in the first three months. They also predict that up to half will have a lower rate after 12 months. So overall there’s a good chance the Reward Loan will work to your advantage, but it’s not a guarantee.

The loan was designed to cater to people who want to take out a loan, but might be blocked from doing so because they have a poor credit history. So if your score isn’t as good as you want it to be, but you’d like to improve it, the Reward Loan could be a good option for you. There are other options when it comes to getting a loan if you have a low credit score.

If you like the sound of the loan, but aren’t confident your credit score will go up on its own, check out our top tips for improving your credit score. And remember that just paying off your loan on time and in full might be enough to boost your score, as it’s proof you’re a trustworthy borrower.

What happens if I miss a payment?

You’ll never be charged a fee for missing a loan repayment with LiveLend. You will, however, have to pay extra interest on your loan, which could have a negative impact on your score.

If you’re worried about missing a repayment, get in touch with their Customer Support team to see how they can help.

How can I apply?

You can check if you’re eligible (or pre-approved) for the new Reward Loan by logging into your ClearScore account and visiting your offers section. We recommend comparing the total cost of the loan with other loans available to you, to make sure you’re getting the best deal.

As with all loans, never borrow more than you need to, and always read the terms and conditions before you apply.

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Written by Frankie Jones


Frankie takes the often confusing world of finance and makes it clear and simple, to help you get your money sorted.