I have a credit card that I have been trying to pay off for a while. Long story short - I ran it up huge years ago like an idiot and have been diligently trying to pay it off. I moved two years ago and did the change of address forms, forward mail, etc. but never received another statement from the card company. I closed the account years ago and don't even have an actual card anymore. I completely forgot about it in the craziness of moving. Now (2 whole years later) I am getting bills from a credit agency stating that if I pay 40% of the total balance they will mark me as "paid in full". Is this OK? My credit is fairly good, but I am looking to buy a home soon and want it to be as perfect as I can get it. Should I accept the offer? I am kind of a credit dummy. Obviously.

First, its not a credit agency - it's a collection agency.

Paid in full is good. However, it will also factor in your payment history and will so multiple 90+ day deliquencies, so that is real bad.

My advice (and I am no expert) would be to get the whole issue resolved and let time do its work.

As for buying a home... its going to depend on who is selling you the loan. Having an outstanding, unpaid collection will really hurt your chances and credit rating.