If I pay a lump sum settlement will my credit score improve?

Usually it says “paid in full for less than the full amount.” (or something like that .)
It might look better to some creditors and it might raise your mysterious FICO score by a bit, and it will also extend the amount of time they will be allowed to show it on your credit report. I think it’s 7 years from the last transaction, so if you pay the settlement, it will be seven years from the date you paid it.

So would you say I’d be better not paying it at all then?

You have to decide. If it were me, and only 1 year out, and I had the means to do it, I would probably go ahead and clear it up.
My first husband ammased some bad debt and they tried to offer me a settlement 20 years later after the statute of limitations was up. Had I paid it, they would have been able to put the debt back on my credit report.

Thanks @Judi , I haven’t received the paperwork regarding the settlement agreement. But, do you think it is more then likely going to say “paid in full for less than the full amount.”? Do you think it’s likely that they’ll lie to me on the phone regarding this?

I just know that’s what they say when you short sale a house.
I would ask them to clarify the exact language that will be on the credit report in writing.