Since this is already a derogatory item on your credit report it does not matter if you pay in full or settle.

Make sure you have the settlement letter in writing before you make the payment.

Hello,

In the past I've had bad credit but over the years it has improved. I'm down to only owing one item in collections on my credit report to a cable company for $680 w/interest that's 3 1/2 yrs old (a pain in my side!). This has been sold to second bad credit company who has sent me several letters to settle for 50% ($340) or pay the original amount owed which is the principal ($512).

I know it would be better for me to pay the principle then settle but I'm certain this company would even settle for $250. I plan to refinance my car in a couple months and want the best possible credit at that time for a low rate. should i just pay the principle so it looks better or should I settle and save my money? will settling look really bad on my credit report compared to paying the principle? Thanks.