When in debt negotiation with a creditor or loan collection agency, the status of payment notes on your credit report are tiered from neutral to negative. Though you may not be able to have the debt notation entirely removed from your credit report, you should push a collection agency or creditor to notate the paid or settled debt in the best possible light. Initially, creditors may be ambivalent, even difficult, when you ask for this update of status on your credit report. Successfully handling creditors in a credit card negotiation or otherwise, takes patience and tenacity.
Your creditor will want to list a paid off but delinquent debt as paid charge off, paid collection, or paid 30+ days late. This is the worst-case scenario. This virtually does nothing to help improve your credit and is nearly as negative as an unpaid status. Push on your creditor to improve this status early.
Negotiate to have your account listed as paid or settled
A settled debt mark on your credit report is still a long way from a return to good standing in the eyes of creditor. Still, it is better than a paid charge off. Accept a settled debt if is your best viable option. Insist your collection agency or creditor change the status of a paid charge off status to a settled debt.
Paid status fastest way back to new credit
Once you have paid, push your creditors reflect that on your credit report with a paid status. Remember, this is the actual status of that account or once outstanding debt. A paid effectively tells new creditors nothing about you as a credit citizen, kind of like having a sealed record of your past accounts that creditors cannot hold against you.