In general, paying a debt that is currently reporting as a collection does not negate the reporting of the collection, and does not per se obtain direct score increase.
However, depending upon the circumstances, there could be associated scoring implications.
If the debt collector is reporting monthly, that is effecting scoring since FICO views the update as an effective reporting that the debt delinquency has extended to that date. Paying ceases updated reporting by the debt collector that the debt remains delinquent.
If the debt is revolving and the creditor still owns the debt, paying can result in decreased % util on the OC account, with possible scoring improvement.
Finally, if you can get a PFD, then the impact of the collection is removed entirely.
Disputing is an entirely different issue. If you dispute the validiity of the debt itself, then yu might not wish to pay any debt that is not legitimate.
However, you could decide that resolving the matter is more important, such as if payment if being requred as a condition for a mortgage approval.
If your dispute relates only to a secondary matter, and not to the validity of the debt per se, then correction may have little or no substantive impact on the debt or your scoring.
Additionally, confrontation by way of dispute could lessen your chances of obtaining a possible grant of a good-will deletion or a low settlement acceptance.
Thus, there are many conflicting opinions as to paying delinquent debt.
General opinions may or may not be consistent with your personal objectives.
