Loan Broker UK


Whether you are a first time borrower or a returning customer, Loan Broker is always your trusted friend.

Here is some free professional advice to help secure and enhance your financial future.

Personal Loans

Does Paying Off an Unsecured Personal Loan Early Hurt your Credit Score?

With so many credit products available in the market, our options are in abundance when we face a monetary challenge. Many of us opt for these products as they offer flexibility in usage and repayment. But amidst all these, we know that a credit score plays a dominant role in our financial lives and also has the capability of affecting our future financially. We always tend to look for ways to improve our score if we have a poor credit score. And a very common strategy to build and maintain credit score is to pay off a loan on time and in full. Whether it’s a credit card bill or any personal loan, we become proactive and responsible to make repayments on time. Some of us are always in a rush to pay off everything we owe at one go so that we do not have to go through the financial burden. But if you are about to receive a raise in your pay and you’re considering to repay the loan early than the agreed date, then hold your horses. It may have some repercussions that can be troublesome for you.

Paying off a loan on time builds your credit score

Making timely repayments is the key to build a stellar credit score. Payment history is considered to be the most important factor in credit scoring and report. Suppose say, you borrowed a loan and it had to be repaid in six equal monthly instalments, out of which, you made timely repayment for five and you delayed the repayment of one loan by only one day. A few points will certainly be knocked off your score and it cannot be avoided. Therefore, it becomes utmost important to repay on time and in full.

Paying off a loan early may cost you extra money

Wondering how? There are different lenders and all have different terms and conditions. A few lenders may consider your request for an early repayment while some may oppose the idea of ending the loan term before the agreed date. Some lenders may charge you an additional amount of money for paying off the loan early. This is called a prepayment penalty or early repayment penalty. To avoid such a situation, go through the terms and conditions of the lender to completely understand the legal agreement you’re entering into.


Paying off a loan early will also benefit the borrower as it will help them to save some extra amount of money in interest and fees. Review the contract carefully to be on the safer side. A penny saved is a penny earned. So, take a wise decision and know the terms and conditions carefully and if you are not clear on something, discuss your queries with the lender. It will always help you in forming and shaping your decision in the right way.

Final verdict

No. Paying off a loan early will not damage your credit score. But it may result in additional expense. If you’re considering to borrow an Unsecured Personal Loan then you must also take into account the factors that revolve around it for your own interests and benefits. You must always evaluate your financial conditions and your affordability to repay the loan before deciding to borrow money. If you borrow an amount that becomes challenging for you to repay, it will dig a deep hole for your financial future. Make a smart borrowing decision by weighing the pros and cons of it thoroughly to avoid any inconvenience in the future.

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Representative APR Example

The rate you are offered will depend on your individual circumstances.

All loans are subject to status. The interest rate offered will vary depending on our assessment of your financial circumstances and your chosen loan amount.

Representative APR Example: On an assumed loan amount of £2,600.00 over 36 months. Rate of interest 41% per annum (fixed). Representative 49.7% APR. Total amount payable £4,557.89 of which £1,957.89 is interest. 35 monthly repayments of £126.61 and a final payment of £126.54


Warning: Late repayment can cause you serious money problems. For more information, go to MONEYADVICESERVICE.ORG.UK
Credit subject to status & affordability assessment by Lenders.
Loan Broker ( is a credit broker and not a lender