I have $11,000 in subsidized loans. One loan is for $5,500 @ 3.9% and the other is $5,500 @ 4.5%. I must pay off the loans within 10 years, but there is no penalty for paying them off early. I will graduate this May and begin working with a wage high enough that I could completely pay off my loans in just one year without it being a significant burden. This would decrease the total amount I pay because of interest.
I have been trying to build up a credit score over the past year or two and I am up to 734 (Good). I understand that part of my credit score is based on the average age of all my accounts. Thus, I believe that my credit score will be better if I do not pay the loan off early, because the average age of my accounts would then be larger.
The part I don't understand has to do with payment history, which is also a factor in credit score. Say that over the course of a year I pay both loans off completely, except for $1 each. Then for 9 years I make no payments until the last month of the last year, when I pay off the remaining $1 (plus accrued interest on $1 over 9 years). Would this help my credit score? I'm not actually making any payments over that time, so would my payment history be good? Should I plan to make a payment of 1¢ every month to ensure that it would actually count as payments?