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What to do with a 5 year old bad debt to make the best for credit score?
I'm in the process of fixing my credit, but I'm down to my last piece of debt (the oldest and largest of all), and I'm not sure how to proceed with this. I've paid off two other accounts, one in full that will be reflected on my credit reports in a few weeks, and one I settled and had it removed from the report. I will not be able to pay this one in full. It's ~$1300 from a Bank of America credit card. The limit was $600 originally, and it's more then doubled since I stopped paying (remember, this was back when one late payment rose the interest from ___% to 39.99% instantly - hence how I got in the hole to begin with. Plus I was young and stupid).
I've paid off all my other debt. I got my old school loans out of default in into consolidation (and deferment because I'm back in school). I applied today and was approved for the Capital One secured credit card (and to my amazement I only had to pay $99 instead of the full $200 I thought I would have to do!). My credit is at 578 according to Credit Karma. My goal is to get it into the mid-high 700's.
With this information/background, what is the best thing I can do with my last derogatory remark on my credit? Remember, I can't pay in full, so I fully expect to negotiate what I'm paying, and I really want it taken care of by Christmas (please correct me if that is a stupid hope). Should I make one large sum? Pay in a few smaller increments? Should I leave it as settled on my account? Or negotiate to get it removed? The card was active between 2006-2007. I made sporadic payments when I could, hence the closing date in 2009. I'm not sure if it is better to leave this on my credit history, or really attempt to have it removed.
I appreciate any advice! Thank you,

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First off,  don't plan on getting to the mid 700's until sometime late 2016 or well after that.  This is based on my own credit history were I had no bad remarks at all, it just took a long time.  Look at my profile for the time-line.

negotiate, negotiate  negotiate.  Seems like you have been doing a good job getting things back on track.  use your negotiating skills to do the same on the last bad remark.   Get your deal in writing with a pay for delete.  

Good Luck.

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