If deleting the collection will meaningfully improve your score, take the deal, but only with the agreement in writing. This move is called pay for deletion. The credit bureaus technically frown on it, yet collection agencies do it all the time, medical debt especially. Before you commit, have your lender run a what-if analysis so you know roughly how many points the deletion is worth. The one rule you cannot skip: never pay on a verbal promise. Get the collection agency to send a letter or fax stating that upon payment of a specific dollar amount by a specific date, they will delete the account from all three credit bureaus. Make the payment only after that letter is in hand. If they take your money and fail to delete, the letter plus your proof of payment lets your lender go back to the bureaus and request a rapid rescore on the agreed terms. Your worry about restarting the account is fair, and the timing matters for exactly that reason. If you are close to buying, coordinate with your loan officer so the payoff and rescore line up with your transaction instead of hitting your file at the wrong moment. Reporting practices vary, so confirm the current approach with whoever is handling your loan.