They are not fully disclosing the various status designations to you. There is no such thing as a "bad debt" status. That is just a generic term that applies to any account that is not in paid, good-standing,
Status codes reflecting the level of delinquency on an OC account are never reported by a debt collector, and dont apply to collection accounts. The recordation of a "120-day late" was taken from the OC account, and not from the collection account. By definition, any collection account must generically be based on a "bad debt."
Collection accounts have only one Account Type, and that is "48-Collection." All collection accounts have a Portfolio Type, which is "Open." The Account Status of a collection is reported as either "93-referred for collection" which means the OC has referred or sold it to them for collection, or a status of "62-Account paid in full, was a collection." The only additional account status that a debt collector can report is a deletion, which deletes all their prior reporting, and what you strive for when offering a PFD, You are asking them to report a current status of account deletion. Poof! It is gone!
Debt collectors have NO reporting codes for reporting of levels of prior or current delinquencies, You dont have an account with a debt collector, and thus dont have levels of delinquency with them, They either report status as under collection or as paid, or delete the collection.,
Prior to collection referral, the OC reports the current status and levels of prior OC account delinquencies to the CRA. Current status reflects the delinquency or payment status only as of the last month. It is not a historical status. To retain the level of prior delinquencies when the current status is updated, that level is retained under an OC reported field code called your "Payment Ratng." Together, the current status tells those reviewing your CR what your current delinquency or payment status is as of the current month only, and the Payment Rating retains the level of delinquency that preceded that status. To look back further in your OC account to score such things as prior delinquencies not retained in your Current Status or Payment Rating codes, the Payment History Profile retains a historical record of past delinquencies over at least the past 24 months.
So, for your situation, I have no idea what was changed in your credit file, and how that change can be explained as a non-existent status of "bad debt."
They are not telling you what what was actually changed.
If you paid the "bad debt," it would not erase the prior levels of delinquency or any of the individual delinquencies reported to your credit file, and thus would not improve your credit score. FICO scores derogs, and not payment status.
If you pay, the Current Status of the OC account will update to status "11- paid, closed account , zero balance, no longer in use." FICO does not score this status, it scores the prior derogs and delinquencies retained elsewhere in your credit file. Thus, no score increase.
Additionally, if you pay, the collection account will be updated to status "62-Account paid, was a collection." FICO still scores this, paid or unpaid, as a collection. So, again, no score increase.
Score increases come about due to the aging of the delinquencies over time, eventually reaching zero impact after they dop from your CR. The exact formula for their rate of deterioration in scoring impact is part of the proprietary FICO scoring formula, and not publically known. Impacts over time can vary depending upon the scoring bucket that FICO uses to categorize you before it scores you, so it is a very difficult, if not impossible, question to answer.
