The damage is mostly already done
By the time an account is settleable, it has usually been late for months, charged off, and perhaps sold — each event already priced into your score. Settling doesn't erase that history, but it converts a live, growing, suable debt into a closed chapter. Scores recover as accounts resolve and time passes; open collections never improve on their own.
Negotiate the reporting, not just the amount
Reporting is a settlement term like any other. From best to acceptable: deletion of the tradeline (debt buyers and agencies agree more often than they admit), 'paid in full', then 'settled in full'. Avoid vague promises — the exact words the collector will report should appear in your written settlement agreement before you pay.
After paying, pull all three reports at AnnualCreditReport.com (free, weekly) about 45 days later. If the account isn't reporting as agreed, dispute it with the bureaus and the collector — you'll have the written agreement and proof of payment as evidence, which makes these disputes very winnable.
The 7-year clock
Negative information generally falls off seven years from the date of first delinquency — the first missed payment that led to the charge-off. Settling does not restart this clock, and a collector claiming otherwise is wrong (and possibly violating the law). Medical collections have extra rules: paid medical collections must be removed entirely, and medical debt under $500 doesn't appear at all.
Ready to act on this?