There is more than one "status" attached to their reporting.
Current status is only the status as of their last reporting, and yes, if you pay, the currrent status must revert from one of a delinquency status (such as 120-late or charge-off) to paid or paid/settled for less. The current balance must also be updated to $0.
However, the account also has a payment history profile, which retains a history my month of all reported derogs, and a "Payment Rating" status, which retains the highest level of prior, historical delinquency that was reported. Thus, changing of the snapshot Current Status to paid does not result in the account no longer being considered as negative, and does not remove the negative scoring impact of any reported derogs.
