Just as with a creditor updating by reporting increase in monthly delinquency period from, for example, 60-days to 90-days late, whenever a creditor reports an update to the CRAs that continues to show a current delinquency status, that increases the reported period since initial delinquency, and affects scoring.
If the creditor ceases updated reporting after 2015, then yes, when you pay the debt and they update to show paid/settled, $0 balance, it extends the effective reported period of delinquency, and can affect scoring. The good news is that after the update to show paid, no further updated reporting will continue to show a current delinquency status, and thus the derog scoring will begin to age.
No, it will not affect the credit report exclusion date, which as has been previously stated is based only on the reported DOFD, but I would not assume that the updating will have no score impact.
Apart from scoring, there are subjective, manual review issues.
Yes, paying, either in full or thru a settlment for less, looks much better, as it shows that you ultimately honor your debts. In some cases, such as in a mortgage underwriting process, payment of delinquent debt could even be an underwriting requirment, but that varies.
You can attempt to mitigate or eliminate scoring implications by either first making a pay for deletion offer, which offers to pay in exchange for their agreement to delete either the reported derogs, such as the charge-off, or even the entire account upon receipt of the agreed payment.
You can also offer a settlement for less contingent upon their agreement not to report any reference to the debt having been settled for less. The account will then appear the same as if it had been paid in full, which is preferable in any manual review.
