The CRAs have a policy, as clearly set forth in their common credit reporting manual, that debt collectors are NOT to delete their collections based on payment of the debt.
The CRAs want to maintain the completeness, and thus value to others, of the credit reports they sell.
Thus, they are complying with their reporting agreements. You will most likely need to speak to a manager to obtain an exception from their normal no-deletion policy.
An underlying may make statements such as it is illegal, when in actuality it is not illegal to delete, but only their policy. Bottom line is that they dont have the authority to dellete, so arguing the basis for their non-deletion is fruitless. You need to speak with someone who has discretion to grant an exception.
As for paying in full vs a a settlement for less, both result in discharge of the debt, provided it is clear that whatever payment they receive is considered full satisfaction of all debt. If payment discharges the debt, the debt collector is required under the FCRA to close their collection and update the balance to $0. No special agreement is required to obtain closure of the collectin and updated reporting of $0 balance.
Howver, the debt collector retains an option, if they settle for less, to separately report that fact to the CRA by way of a special comment stating paid/settled for less.
That is never a favorable bit of info in your credit report, as it advises others doing a manual review that you have a prior history of not paying the entire debt that you obligated. Stated simply, it advises that a prior creditor took a loss in having extended credit to you. That alone can be a basis for denial of new credit.
Outside of obtaining a PFD, the next best thing is to obtain a settlement for less, thus saving money, and additionally their agreement not to report paid/settled for less.
Your credit report will then read the same as if you had paid the debt in full.
