Maintain and use your credit card. It serves as an excellent tool to boost a good credit score if utilised properly. However, the trick is to use it well and avoid making late payments. Things like not stretching it too close to your credit limit, regular use of the card but timely payments upfront is proof of how you manage credit lent in the short term. This will lay the foundation or provide a sample of how capable you are in managing loans long term, hence this can prove to be an asset to your credit score and help in improving your credit score. 

Yes, its official now! You will be able to access your credit scores in December 2010. The score will range between 300-900, indicating the levels of default and will be available to consumers for a sum not exceeding Rs.100 as prescribed by the RBI. CIBIL, which already has a huge database of credit reports, which are currently consulted by banks before sanctioning a loan is putting up the infrastructure to be ready to service consumers who wish to access their credit reports. Isn’t that great news? Now, many of you maybe wondering how your credit report will look like, how to go about setting any mistakes in the report right, how to maximise the benefits of being able to access your credit score and other such issues. Well, look no further. 

1) GET A COPY OF YOUR CREDIT SCORE EVERY YEAR FOR AN ANNUAL REVIEW
You should study the credit report carefully for any hidden flaws or misinterpretations. If you find anything that you feel requires a second check, do it and if still you are convinced it is indeed a flaw, then you need to address the concern immediately and escalate the issue.

2) TAKE UP ISSUES THROUGH THE FASTER ROUTE
You need to take up issues in your credit report with the bank in question first, if for instance its a debt situation, which has already been paid and is still being recorded as a debt. The bank will then update the credit agency regarding the status and all is well. This approach is less time consuming and far better than directly contacting the credit agency. If in case the bank does not oblige you can take up the matter with the credit agency and the banking ombudsman after waiting for a period of a month, which is the standard waiting period you must provide to the bank to take necessary action.

3) PAY YOUR BILLS ON TIME
Whether they are loans, credit card payments, insurance premiums every payment counts. If you have hassles remembering payments consider setting up an automated system with your bank to get it cleared within the due date. It is sure shot way to improve your credit score.

4) KEEP THAT CREDIT CARD AND USE IT JUDICIOUSLY
Maintain and use your credit card. It serves as an excellent tool to boost a good credit score if utilised properly. However, the trick is to use it well and avoid making late payments. Things like not stretching it too close to your credit limit, regular use of the card but timely payments upfront is proof of how you manage credit lent in the short term. This will lay the foundation or provide a sample of how capable you are in managing loans long term, hence this can prove to be an asset to your credit score and help in improving your credit score.

5) CREDIT TO DEBIT RATIO IS THE KEY FACTOR
As with all logic based reports, your credit report is based on the flow of credit and debt. Here the ratio between these two factors is directly related to your credit score average. For instance, if u have several outstanding debts, even if you pay them on time it would still affect your credit score as your total net worth goes down. Hence try and pay off as much debt as possible and keep them to a minimum before taking a fresh debt or loan.

6) DO NOT CLOSE YOUR CREDIT CARDS
In line with the same credit to debit ratio aspect, closing down your credit card may not help the score. Even if you do not use the credit card, it would still make sense not to to close it. If you have concerns and must absolutely close it, you may choose to do so but be aware that this also has a say in your credit score.

7) QUICKLY ACT UPON ISSUES IN THE CREDIT REPORT
Dispute a bad credit botch always, don’t sit back and let it remain. Try solving the issue by contacting the bank and the credit bureau. If your concerns are taking time to be addressed, credit report systems that are still evolving in India might soon discover at least temporary solutions to the issue like bookmarking the issue as something under the scanner. This will protect you from being evaluated on the basis of a faulty issue in the credit report. This may help you have enough time to resolve the issue with supporting evidence regarding any false debt situations.

Filing tax returns is an annual mandate that tax payers have to comply with, the last date for which is in sight i.e. July 31st, 2010. In a haste to meet the deadline, make sure you do not miss key elements that can cause trouble later.

Critical information should be cross verified

No income tax return will be accepted without the PAN and incorrect PAN can result in a fine being levied. Communication address should be correctly stated as all notices or other communication from the IT department will be sent to the provided address. Also make sure that the MICR code is correct if you want an electronic refund and also ensure that bank account details are correctly stated for hassle free refunds.

Safe keep all relevant documents for future use

The IT department has done away with enclosing documents while filing returns i.e. proof of tax, statement showing computation of taxable income etc. Not having to produce it at the time of filing returns doesn’t meet that you can put away the documents carelessly. In case of scrutiny, the tax authorities may need supporting documents for verifying the claims made in the return.

Disclose exempt income and investments made

Income such as dividends from mutual funds and long-term capital gains on listed securities, are exempt from tax. Even though the tax laws do not require you to pay tax on the same, the law requires you to report these in your tax return.

Investments above a prescribed limit have also to be disclosed as per IT laws. They include:

Mutual fund investment in excess of Rs. 2 lakh
Cash deposits in excess of Rs. 10 lakh
Credit card payment in excess of Rs. 2 lakh
Bond investment in excess of Rs. 5 lakh
Property bought or sold in excess of Rs. 30 lakh

Report income from a previous employer

Employers deduct TDS from the employee’s salary. While computing the TDS, employers generally provide the basic exemption deduction to the employee. If at the time of changing the job, the employee has not informed the new employer, it could lead to a situation where the TDS cut by the new employee would be low, as he may be taking in to consideration the full deduction amount while calculating tax. Thus you may have tax liability at the time of filing returns. Not disclosing income from the previous employer may result in an income tax notice as it will be spotted when the TDS data is being reconciled.

Revision of Income

If the IT return has been filed before the due date i.e. 31st July, tax payers are entitled to submit a revised return in case of any error or omission therein. However, revision is not permitted if the return is filed beyond the due date.

Precautions taken at the time of filing returns will prevent hassles later. To make sure you file your returns before the 31st, start the process now- Procrastination is the thief of time!

Everybody is in the race to earn as much as they can. While your job or occupation generates income and is the primary source of livelihood, you can earn extra money by means of passive income. For example, the dividend income you receive from the shares you own is passive income. 

This is because you are not actively working everyday to earn this income. However, you have invested in it one time and the investment earns you an income as times passes. Any income that is not related to your daily activity is passive income. Strictly speaking, passive income includes only the income for which one does not have to work regularly.
 
Passive income can help you build up wealth over a period of time. It is also a good idea to create sources of passive income that will generate regular income for you once you retire or are unable to work for a time period. For example, if you have purchased an apartment for investment purposes and you let it out, the rental income you earn regularly can be utilized towards your monthly expenses when you retire.
 
It is important that one finds ways to make your money work for you. Create assets and investments that will work to grow your money and supplement your salary. Passive income is extremely important when you cannot work for some reason. For example, in the event of an illness or accident, when you are not able to earn your regular salary, passive income plays a crucial role in maintaining your lifestyle.
 
Passive income is especially important for women. Most women take a break from their employment / occupation at certain points in their life like after marriage or having a child etc. It would boost their confidence if they earn some income even if they are not able to work for some time.

Types of Passive Income:  

Interest Income – This is a very basic form of passive income and can be generated by all individuals. Interest earned on savings account balance, fixed deposits, recurring deposits or bonds is a risk free source of passive income. 

Rent – If you are able to invest in a flat / apartment and do not need to use it for personal purposes, you can give it on rent. Not only can you earn regular income through rent but the deposit money paid by the tenants can fetch interest income. You can also earn passive income by renting out your vehicle. 

Royalty income – If you have a creative streak to you and can earn royalty for any of your work, it is a good source of passive income  

Dividend Income – Investment in shares can earn you dividend income. However, these investments come with a risk of loss, therefore, investing in good reputed companies with sound financial numbers is important.

Residual Income - is another form of passive income. For example, an LIC agent earns commission for the entire policy tenure of the customer even if he does not actively work on it once the purchaser buys the policy. 

All and sundry – any money that you earn besides your job is passive income. Hence if you win a lottery or a competition, the income you earn is passive income. If you have a hobby of painting and you sell any of your paintings, it will generate passive income. If you are a financial controller and can take lectures or seminars in your free time it will generate income. Although, this does not strictly fall under passive income, it has great earning potential and should be considered.
 
Passive income is an important source of income. Therefore, one should create avenues of generating passive income even if it is very small in value. For example, you can begin with a fixed deposit of Rs.10, 000 and add to it as and when you can. The extra income can be utilized to build more wealth or simply spent on pampering yourself!