Does paying off debt in one lump sum have penalties?

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LAURA RILEY

• July 14, 2022 21:24

I’m in a unique position to pay off my (high interest) CC debt and a 3 (low interest) home repair loans. In all about 50k. Will my credit score be penalized to do this all at once? CC payment has been posted already. Best way to pay down the home improvement loans? tia

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• Official comment

  

  Victor D

  • July 17, 2022 15:35

  Hi Laura,
  
  Thanks for reaching out to NerdWallet. Good work on getting out of debt!

  These articles share some good information about the impact paying off debt can have on your credit score:

  • I Just Paid Off My Credit Card. Will My Credit Score Go Up?
  • Why Did My Credit Score Drop After Paying Off Debt?

  Additionally, some credit card issuers and lenders may charge early payoff penalties. I recommend checking their web sites thoroughly for that information, or contacting their customer service department. 
  
  Finally, here are a few more resources that you might find helpful:

  • 5 Do's and Don'ts of Repaying Your Personal Loan Early
  • How to repay a personal loan early - NerdWallet
  • Should You Pay Off Credit Cards or Loans First? - NerdWallet

  
  Best Regards,

  Victor

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