Yes, it may result in a dispute flag, temporarily resulting in some information in your file being excluded from scoring, but it wont update the date of occurence of the asserted delinquency itself, and thus wont update the critical CR exclusion date.
To minimise the impact of a dispute on your score, I would file any dispute directly with the furnisher as opposed to disputing through the CRA. Disputes through a CRA will result in an automatic dispute flag. Direct disputes wont unless the furnisher takes the additional step of separately reporting the dispute to the CRA.
If you were not 120 late, that is a major derog that is well worth disputing. You will at least require them to conduct an investigation and state that the accuracy is verified. That improper verification could then serve as the basis for subsequent legal action.
As a side note with reference to the title of the post, the absence or presence of a prior derog is not relevant to its current status of current. A once delinquent account that is brought back into good standing results in a current status of pays as agreed. Current status has no memory. The prior delinquency is a separate issue.
