A paid collection is better than an unpaid collection. But it's still a collection. Denying a loan request based on this is not discriminatory on a prohibited basis. So yes, you can deny the request. When I make a loan I expect it to be repaid according to schedule. The fact that many calls and letters and even door knocking had to happen, and the loan was repaid 6 months or a year late would sure influence my decision.
As a collector I'm sure I told my customers that opening line many times. And if asked, "if I pay this off today will you consider another loan to me" my answer was always yes. The time it took me to consider the new loan was likely very short, however. About as long as it took me to to say "yes" to the payment.
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AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell