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+--- Thread: How do I increase my credit rating? (/showthread.php?tid=756)
How do I increase my credit rating? - Unknown98 - 08-21-2018
Going to sticky this since it is a very common question.
Short answer: Lower your debt to asset ratio (have more assets than debts), have positive cashflow, and strong profit margins. Airline age also plays a small role.
Long answer: It's complicated.
You will not get to AAA credit rating in a short amount of time, in fact it could take you several weeks to get into the B's.
There is a spreadsheet available that you can download to see how the credit rating is calculated for your airline. See here: https://docs.google.com/spreadsheets/d/1HThP4AyS0zw6ouolBKyKzRD3vuo0tnL0gaIB28pcNu0/edit?usp=sharing
Simply having more assets than debts is not enough in and of itself, if you do not have a positive cashflow, it will severely impact your credit rating.
RE: How do I increase my credit rating? - chaitanya - 08-22-2018
Also, I think after leasing the maximum possible aircraft when starting your airline, the money you are left with should be used to buy some used aircraft. The used aircraft's value would be counted as an "asset" and would generate extra income. So with time, you would be able to pay off your loans (so fewer liabilities) but with the initial investment of buying the used aircraft you would increase your "asset" values.
RE: How do I increase my credit rating? - Unknown98 - 08-22-2018
Yes. Paying off loans lowers your debt, but it also lowers your liquidity which is why sometimes if you pay off a loan, your credit rating will drop a point.
RE: How do I increase my credit rating? - squaregatescrub - 08-26-2018
is an aircraft lease considered a "debt"? just wondering if i should lease more or start buying used aircrafts. thanks.
RE: How do I increase my credit rating? - Unknown98 - 08-26-2018
Yes, debts = aircraft leases, gate leases, and loans
RE: How do I increase my credit rating? - squaregatescrub - 08-26-2018
Got it. Thanks. Well, I guess it's either I take another big loan or just continue leasing.