You're listening to AC N A podcast. Hey, there, this is Andrea and you're listening to the Money Talks podcast. Now, before we dive into today's episode, it's a good time for us to address some feedback that we've gotten from you on the legacy planning episode. Now, before I do that, we just want to say thank you for listening to Money Talks because without you subscribing and listening to us, we won't have this interaction and this means a lot to us. So thank you once again.
All right. So first point that I wanted to bring up and clarify is on how assets are distributed. When a minor beneficiary is involved. Let's make it easier with a sample scenario. Shall we? Let's imagine we have a minor and his name is Ryan. So Ryan's parents have passed away and they've left behind a will. Now, the will states that Ryan is to inherit everything when he's of age. Now, the will also mentions three people, a guardian, an executor and a trustee. So this is what each of
them do. Let's start with the guardian. So the guardian is someone Ryan's parents have appointed to be responsible for him until he comes of legal age. The executor, the second person mentioned, manages and distributes the assets as per the will. The third person is the trustee and that person is given the duty of overseeing the assets until Ryan is entitled to inherit them. So we went a step further.
We spoke with Javen Sim, he's from populist law Corporation and he says it's possible and actually quite common for the same person to wear all three hats, meaning the same person can be the guardian, the executor and the trustee. But it can also be customized to have two or three different people playing these different roles. So it really all depends on how Ryan's parents would have wanted it
or had wanted it in their will. All of this is completely separate from how CPF monies are distributed. So CPF is obviously a different vehicle altogether, right? If no CPF nomination has been made, this is why it's important to make your CPF nomination. By the way, what happens to the CPF money as well. It's going to be handled by the public trustee who will then distribute the money according to the intestacy laws or for Muslims inheritance certificate in Singapore.
Ok. So we also got another comment and this one was on the grunt of probate. So when a person dies and leaves behind a will, the executor that's named in the will, must apply for a grant of probate to start distributing the assets. Now, the time taken to obtain the grant varies. It may be as quick as fewer than three months or it can be up to a year or more. It really all depends on how complex
the estate is. There could also be issues like family members disputing the grant or issues in uncovering the assets or issues with the will itself. It really is on a case by case basis. So we hope that that clarifies this point on the grant of probate. I want to thank Peggy Yee from Py Legal LLC for talking to us as well. And if you have any more messages for us, feel free. We love this exchange and this interaction with you. But
in the meantime, I want to bring you the next episode. So, you know, growing up in Singapore, you always have a kind of score to achieve, right? It starts with the PSLE and then it ends with right now a grading at the workplace during your appraisal and that determines how well you or not so well you performed in your job right? Here's another kind of score. You might not have known
about your financial score. Now, it's called a credit report and it gives a sort of health rating on your finances, but I bet most of you have no idea what your score is, much less used it or referred to it. So it is important though in some aspects, credit report. So here in the studio to tell us why is Wong Sok Kwan, head of Consumer Services at Credit Bureau, Singapore. So Kwan, thank you very much for
joining me. Thank you, Andrea. Ok. So I want to start the conversation by putting you on a spot a little bit. Ok, I think I know the answer. But is your own credit score healthy?
Definitely
because as someone who works at the credit Bureau, I imagine that's something you have to keep your tabs on. Ok. So I'm curious though, with the exception of people like you and me, we are familiar with what's happening in the financial world and our financial health, most people actually don't really know that they can get a credit report. Is this your experience as well?
Yeah, not everyone know about this.
So what do you tell them?
Yeah, we will ask them to visit our website at WW dot Credit bureau.com dot SG to obtain a copy of their report. So even if they do not want a copy of report, we also have sample report attached in the website so that you can take a look of the interpretation.
So it doesn't, it doesn't have to be if you're too afraid for example, to look at your report, you can look at the sample one. Ok. So you can pay $8 I believe and then get a report. I've seen my credit report and I'm still confused. Walk me through the grading system,
there is a numeric score and also there is a alphabetical score. It will be from a A to hh so a A will be of course the best score, of course. Yeah hh will be the higher chance of a person will be falling into delinquency. The score will be ranging from 1000 to 2000 with 2000 being the best score which is the highest credit worthiness and also for 1000 being the lowest credit worthiness. Ok, so of course it will be good to have a a score. Ok,
a a so that is accompanied by the numerical score. Is that correct? Yes. Ah ok. What is this score based on the
score is based on the information in the credit report such as the monthly installment you will see that the 12 cycle in your credit report, whether you pay full payment or not in every month it is a 12 month it's a 12 month cyc so whether is it a full payment? Whether is there any missing cycle you did not pay?
Ok, so if you don't pay it is going to raise a red flag and it's gonna
adjust the score a little bit.
Ah ok so this is why you have to pay your bills. Our credit reports just tells us how well or how badly we are scoring. What essentially are credit reports used for? I mean who has access to them besides us
consent for example, if your company is doing a credit check on you, you will definitely have to sign a consent form before CBS can review the report to them.
Ok. So how often does this happen where companies request for an individual's credit report?
Yeah, I think it varies for different organizations. I mean, some will do annual checks, some will do quite frequent check. It depends on the res appetite,
right? So this is both for existing employees,
existing employees and those new onboarding candidates,
right? Ok. When a company does a credit check on an individual, be it an existing employee or a new employee, is there a limit that they cannot breach? For example, someone who scores above an age? But you're not an A a either perhaps like ad or an F is that something that raises red flags for companies?
Different banks of different organizations have different risk appetite. So it depends on what they are looking at.
Ok. What do they pay attention to normally
usually is account status history, any aggregated outstanding balances and the amount of credit facility that you have. Of course, the more credit facility you have there is a chance for you to miss payment or forget your payment, which would eventually affect your credit behavior.
Ok. Aside from companies, banks are also able to access our credit reports. Is that correct? They still need your permission to do that.
Just like when you apply for a credit card, you do sign authorization for them to pull your credit report. So without any authorization, the bank is unable to do so.
Ok. So I've seen my credit report before as I mentioned earlier and it's a really technical sheet, right? A piece of paper with a lot of courses, a lot of digits. So let's talk about how to read a credit report. First and foremost, what's the most important data point to zoom in on?
Yeah, so I have a credit report here with me right now.
Ok, a sample, right? So of
course it's a
lot of words. Yeah,
so the first page is just your person data personal details. We will focus more on this account status history, right? So for the first year, we will show the type of credit facility you have such as bank loans, credit cards, and unsecured credit. So any mortgages loan will also appear in this section.
Yeah, I see H DB loan there as well. Yes. So obviously each month that you pay your loans, your credit cards, that number is going to change every month, right? So what else am I seeing on this credit report?
Yeah, you will see that there is this section under previous inquiry, you will see that. Ok. The bank is reviewing on you on your existing credit facility or if there is any new application. So for this new application, we have to take note that we should refrain from apply too many new credit facility at a short period of time?
Ok. What do you mean by short? How short
is short, how short it depends on the risk appetite from the bank. So if a person applying, for example, can credit facility within one month. So it shows that this person by a lot of credit within a short period of time, right? Yes. So it will more or less affect the credit score if you have too many new application in this section.
Ok, so don't apply for too many credit facilities in a short period of time. Ok. What else do you think is the most important data point here in the credit report?
Yeah, actually all the parts plays a little role in achieving the credit score. So there is also a section showing aggregated outstanding balance and your monthly install. Ok. Yes. So these are the aggregated outstanding balance which the lenders can tell. Ok, what is the current total outstanding that you have with all the banks and fis? Why
is this important to the people who are viewing this report? Is it meant to show that I am paying my bills regularly?
Yeah, so to assess the person credit worthiness, whether did they pay on time all the time and whether can they afford within their credit limits?
And obviously we know that paying our bills in full is a big benefit to us if we don't pay in full and we roll that credit. But we are regular payers. That's also ok. Right.
Yeah, that will be ok but
not advisable, not
advisable because this will also be reflected in the account status history, full payment or not. So if there is, and throughout it means that this person has not been paying full every time, right?
Ok. And that's a pretty big warning as well, right? For whoever's reviewing the credit. Ok. So if we have have a less than sparkly credit report, right, you will find that we are unable to apply for a new loan, for example, because our credit reports not looking very good. How would you recommend we use our credit report to review our own financial habits?
Of course, if we are in debt, we need to try to prioritize which are the credit facility that we need to pay off first. For example, if credit card is the one that imposes more interest rate, we should pay the credit card first so that the interest will not be rolled over to become snowball amount, which we are unable to pay. If the amount becomes snowball and we are unable to pay. And the bank loaded a default, then it will be reflected in this default section. Ah,
and the default is a bankruptcy as well or is that
different? Is different? It's just that they are unable to pay off the credit facility and they will negotiate with the bank to come up with a settlement amount.
Ok. The other thing that I discovered is that the fact that I have no credit and that can actually be a bad thing. So when you don't have enough of credit activity and the credit report gives you a grade, is that grade an A a or an hh,
so it wouldn't be fall into this a A to hh range. So it will be classified as a non score risk grade which the consumer will be awarded with AC X score AC X. Ok. So it defines that it has an insufficient credit history to enable the credit score to compute a score for this individual.
Ok. So is this CX grade good or bad?
It depends on the lenders, what they are looking at it basically tell the lenders that this person does not have a credit profile at all. Yeah, probably a fresh grad.
Ah I see or someone like me who took long to pay off a debt and then just didn't have any more credit cards after that.
Right? Bear in mind that if you just rebuild your credit, that's fast track to it because it takes time to rebuild your credit in the credit report. It shows the past 12 cycle at a point of time when you retrieve a report. So we have to slowly build up the credit score and it depends on individual because the credit score will look into all parts of the reports, not just only on the account status history. It will look in the profile as a whole.
The credit report shows a 12 month cycle. Correct. How often does the grade change see if certain time a certain duration of time has and you've not paid?
Ok. The score will be only generated if you put out your own report at a point of time. When you did not put out your report, the bank will continue to load the payment cycle and there wouldn't be any score,
right? So if I buy my report in January, it gives me that score for that period. It just reflects the live score and then later on if and then I don't pay by my bills for about two months. So by the time April comes around and I download my April credit report, then it will show a different score.
It may or it may not depends on your credit behavior. For example, during that period, did you apply any new credit facility applying too many credit facility during a short period of time will also impact on the score?
I understand that it takes some years for your sort of record to be clean again after you've paid off your debts. And you did say rightfully that the Credit Bureau looks at how you grow that credit again, right? Which is an indicator of financial health. Why does it take so long?
Different consumer have different issues of repaying that debt. Probably some miss a few cycles. So they take shorter time to rebuild. But for example, for some, they have been missing for the past 12 cycle and did not make payment in full, which explain why they need longer time to build up their credit profile.
So maybe answer this question that I have then why is it important for us to have some kind of credit on our name? Yes.
So that we can see whether is this person a good payment master or not, whether can they pay on time every time? And also how good are they in managing their finances?
Ok. So how often should we be checking our credit health? How often should we be paying this $8 and downloading this credit report?
I feel that you yourself would know that whether you have been paying or not. So if you have been paying, then your score would definitely be improving.
Um ok. How often do you check your credit report?
To be honest, I don't do checks on my own credit report.
Yeah, because you are very confident of paying your bills on time. Yeah. Ok, exactly. Is a good time for us to download our credit report? I imagine when you're about to spend the big bucks right on a house or a car, for example. Would that be an example?
Yes, of course. We will not get the credit report until the time that we need it as mentioned earlier on. We can actually download the report any time so that you can understand your credit health and see how can you improve on your credit score.
And that's before. Yes, you have or when you have intention of buying a flat or a house or a car, right? So, so Kwan, do you have any final notes about what is it about a credit report that we need to know?
It is important to maintain a good credit score so that it won't affect your employment. It won't affect your credit application.
Ok. On this podcast, we've been advised by numerous guests, the importance of paying your bills, especially high interest credits to summarize good credit health. Just like our physical health. It is a reflection of how well we are in control of our finances. It's also a positive signal to creditors and companies that you are a reliable trustworthy borrower who always honors your debts and that has ripple effects when it comes to your jobs and access to loans in the future as well.
Who doesn't want a clean sheet? Having a good credit record actually helps you more than hinders you. So, Kwan, we have a segment called Questions from a hat. So there are mystery questions in here. None of them difficult. Don't worry. This is the fun part of the podcast. You'll have to pick a question from this hat. So just pick one hand it to me and then I will ask you the question. All right. So Kwan, what financial advice would you give to your 20 year old self?
20 year old self? Ok. I think if, when I'm 20 years old probably I can apply a credit card. Yeah. So at that point of time I would tell myself to spend wisely and spend within our own means so that my credit score will be good. But of course, at that point of time, I wouldn't take a copy of my credit report yet.
Neither did I and I probably don't think a lot of 20 years out there would do the same. So Kwan, it's been a pleasure. Thank you so much for coming on the podcast today. Thank you. And hey, listen up, we hope there was something in this conversation that was useful that taught you something about checking in on your financial health. It doesn't hurt to go into triple W dot Credit bureau.com dot SG. That's where you can download
your credit report for just $8. If you have any thoughts or questions about this episode, please just send us a message. Money Talks is available on Apple Podcast, Spotify and youtube music. Don't forget to rate us if you're enjoying the podcast. Big thanks to the team Christina Robert Tiffany, Ang, Jaini, Johari, Joanne Chan and Sa Wind. I'm Andrea Heng. Thank you for listening to Money Talks.