I am trying to buy a house, when they pulled my credit it showed that I have this debt of 1000 thousands dollars since 2003. If I pay that off will it make a deference on my report.

Of course it will.
If you can afford it, do it as soon as possible.

Actually paying off that debt may not have a great affect on your credit.The fact that you defaulted on the debt will remain on your credit report for a few more years. That fact that you could have afforded to pay it evidenced by your paying it not, may be considered a negative.

You can file a dispute with all three credit reporting agencies about this matter. The company who reported it has about 30 days to respond and basically prove you defaulted on the debt or the agencies have to remove this from your credit report.

Also you can try to work something out with the company whereas if you pay they will remove the negative entry on your credit report.