Do fixed penalties affect SEO? John Mueller answers this question on Google's SEO Snippets video series.
Today's question is from Switzerland. Michael asks, I had a penalty, and I fixed it. Will Google hold a grudge?
First off, at Google we call them manual actions, not penalties, since they're generally applied manually by a team here, and they don't always have a negative effect on a site overall. In Search Console, we inform sites about any manual actions their site might have. If you receive such a notification, you can take action on that, resolve the issue, submit are consideration request. The web spam team processes these. And if they can confirm that the issue is fixed, they'll lift the manual action.
It might take a bit of time for everything to be reprocessed, but Google's algorithms won't hold that issue against the site in the long-term. However, it's possible that a site temporarily had an unnatural advantage before. By fixing this issue, your site will return to its natural location in our search results.
Additionally, things change on the web and in our search results all the time. A site's visibility in search can change over time, even if nothing on the website changes. So with that in mind,it can be normal that a site doesn't return to exactly the same place as before manual action.
So in short, no, Google's algorithms don't hold a grudge. However, visibility in search can change over time, regardless of any manual action.