As long as the agreement is that payment will discharge the debt, it is paid regadless of whether it is in full or settled for less.
The account status will be paid, and the debt balance with the OC and the collection balance with any debt collector becomes $0.
Howver, if the creditor accepts less than the full amount of the debt, they have the option of additionally reporting the special comment of paid/settled for less, which informs others that you did not pay the entire debt that you obligated. The CRAs choose to permit the addition of that information as adviement to others that you have, in the past, not paid an entire debt that you obligated. That is never a favorable comment when a potential creditor is evaluating an application for credit.
If the owner accepts less than the full amount of the debt, you can also, as part of a settlment agreement, obtain their agreement not to report the addtional information that it was paid/settled for less. Absent that special comment, your credit report will then appear the same as if the debt had been paid in full.
Your credit report will not contain any false statements of paid in full. It will simply say paid, $0 balance, with no reference to payment terms.
