Speaker 1: You're listening to AC N A podcast.
Speaker 1: Hey, there, this is Andrea and you're listening to the
Speaker 1: Money Talks podcast. Now, before we dive into today's episode,
Speaker 1: it's a good time for us to address some feedback
Speaker 1: that we've gotten from you on the legacy planning episode. Now,
Speaker 1: before I do that, we just want to say thank
Speaker 1: you for listening to Money Talks because without you subscribing
Speaker 1: and listening to us, we won't have this interaction and
Speaker 1: this means a lot to us. So thank you once again.
Speaker 1: All right. So first point that I wanted to bring
Speaker 1: up and clarify is on how assets are distributed. When
Speaker 1: a minor beneficiary is involved. Let's make it easier with
Speaker 1: a sample scenario. Shall we? Let's imagine we have a
Speaker 1: minor and his name is Ryan. So Ryan's parents have
Speaker 1: passed away and they've left behind a will. Now, the
Speaker 1: will states that Ryan is to inherit everything when he's
Speaker 1: of age.
Speaker 1: Now, the will also mentions three people, a guardian, an
Speaker 1: executor and a trustee. So this is what each of
Speaker 1: them do. Let's start with the guardian. So the guardian
Speaker 1: is someone Ryan's parents have appointed to be responsible for
Speaker 1: him until he comes of legal age. The executor, the
Speaker 1: second person mentioned, manages and distributes the assets as per
Speaker 1: the will.
Speaker 1: The third person is the trustee and that person is
Speaker 1: given the duty of overseeing the assets until Ryan is
Speaker 1: entitled to inherit them. So we went a step further.
Speaker 1: We spoke with Javen Sim, he's from populist law Corporation
Speaker 1: and he says it's possible and actually quite common for
Speaker 1: the same person to wear all three hats, meaning the
Speaker 1: same person can be the guardian, the executor and the trustee.
Speaker 1: But it can also be customized to have two or
Speaker 1: three different people playing these different roles. So it really
Speaker 1: all depends on how Ryan's parents would have wanted it
Speaker 1: or had wanted it in their will. All of this
Speaker 1: is completely separate from how CPF monies are distributed.
Speaker 1: So CPF is obviously a different vehicle altogether, right? If
Speaker 1: no CPF nomination has been made, this is why it's
Speaker 1: important to make your CPF nomination. By the way, what
Speaker 1: happens to the CPF money as well. It's going to
Speaker 1: be handled by the public trustee who will then distribute
Speaker 1: the money according to the intestacy laws or for Muslims
Speaker 1: inheritance certificate in Singapore.
Speaker 1: Ok. So we also got another comment and this one
Speaker 1: was on the grunt of probate.
Speaker 1: So when a person dies and leaves behind a will,
Speaker 1: the executor that's named in the will, must apply for
Speaker 1: a grant of probate to start distributing the assets. Now,
Speaker 1: the time taken to obtain the grant varies. It may
Speaker 1: be as quick as fewer than three months or it
Speaker 1: can be up to a year or more. It really
Speaker 1: all depends on how complex
Speaker 1: the estate is. There could also be issues like family
Speaker 1: members disputing the grant or issues in uncovering the assets
Speaker 1: or issues with the will itself. It really is on
Speaker 1: a case by case basis. So we hope that that
Speaker 1: clarifies this point on the grant of probate. I want
Speaker 1: to thank Peggy Yee from Py Legal LLC for talking
Speaker 1: to us as well.
Speaker 1: And if you have any more messages for us, feel free.
Speaker 1: We love this exchange and this interaction with you. But
Speaker 1: in the meantime, I want to bring you the next episode. So,
Speaker 1: you know, growing up in Singapore, you always have a
Speaker 1: kind of score to achieve, right? It starts with the
Speaker 1: PSLE and then it ends with right now a grading
Speaker 1: at the workplace during your appraisal and that determines how
Speaker 1: well you
Speaker 1: or not so well you performed in your job right?
Speaker 1: Here's another kind of score. You might not have known
Speaker 1: about your financial score. Now, it's called a credit report
Speaker 1: and it gives a sort of health rating on your finances,
Speaker 1: but I bet most of you have no idea what
Speaker 1: your score is, much less used it or referred to it.
Speaker 1: So it is important though in some aspects,
Speaker 1: credit report. So here in the studio to tell us
Speaker 1: why is Wong Sok Kwan, head of Consumer Services at
Speaker 1: Credit Bureau, Singapore. So Kwan, thank you very much for
Speaker 1: joining me. Thank you, Andrea. Ok. So I want to
Speaker 1: start the conversation by putting you on a spot a
Speaker 1: little bit. Ok, I think I know the answer. But
Speaker 1: is your own credit score healthy?
Speaker 2: Definitely
Speaker 1: because as someone who works at the credit Bureau, I
Speaker 1: imagine that's something you have to keep your tabs on. Ok.
Speaker 1: So I'm curious though,
Speaker 1: with the exception of people like you and me, we
Speaker 1: are familiar with what's happening in the financial world and
Speaker 1: our financial health, most people actually don't really know that
Speaker 1: they can get a credit report. Is this your experience
Speaker 1: as
Speaker 1: well?
Speaker 2: Yeah, not everyone know about this.
Speaker 1: So what do you tell them?
Speaker 2: Yeah,
Speaker 2: we will ask them to visit our website at WW
Speaker 2: dot Credit bureau.com dot SG to obtain a copy of
Speaker 2: their report. So even if they do not want a
Speaker 2: copy of report, we also have sample report attached in
Speaker 2: the website so that you can take a look of
Speaker 2: the interpretation.
Speaker 1: So it doesn't, it doesn't have to be if you're
Speaker 1: too afraid for example, to look at your report,
Speaker 1: you can look at the sample one. Ok. So you
Speaker 1: can pay $8 I believe and then get a report.
Speaker 1: I've seen my credit report and I'm still confused. Walk
Speaker 1: me through the grading system,
Speaker 2: there is a numeric score and also there is a
Speaker 2: alphabetical score. It will be from a A to hh
Speaker 2: so a A will be of course the best score,
Speaker 2: of course. Yeah hh will be the higher chance of
Speaker 2: a person will be falling into delinquency. The score will
Speaker 2: be ranging from 1000 to 2000 with 2000 being the
Speaker 2: best score which is the highest credit
Speaker 2: worthiness and also for 1000 being the lowest credit worthiness. Ok,
Speaker 2: so of course it will be good to have a
Speaker 2: a score. Ok,
Speaker 1: a a so that is accompanied by the numerical score.
Speaker 1: Is that correct? Yes. Ah ok. What is this score
Speaker 1: based on the
Speaker 2: score is based on the information in the credit report
Speaker 2: such as the monthly installment you will see that the
Speaker 2: 12 cycle in your credit report, whether you pay full
Speaker 2: payment or not in every month it is a 12
Speaker 2: month it's a 12 month cyc
Speaker 2: so whether is it a full payment? Whether is there
Speaker 2: any missing cycle you did not
Speaker 2: pay?
Speaker 1: Ok, so if you don't pay it is going to
Speaker 1: raise a red flag and it's gonna
Speaker 2: adjust the score a little
Speaker 2: bit.
Speaker 1: Ah ok so this is why you have to pay
Speaker 1: your bills. Our credit reports just tells us how well
Speaker 1: or how badly we are scoring. What essentially are credit
Speaker 1: reports used for? I mean who has access to them
Speaker 1: besides us
Speaker 2: consent for example, if your company is
Speaker 2: doing a credit check on you, you will definitely have
Speaker 2: to sign a consent form before CBS can review the
Speaker 2: report to
Speaker 2: them.
Speaker 1: Ok. So how often does this happen where companies request
Speaker 1: for an individual's credit report?
Speaker 2: Yeah, I think it varies for different organizations. I mean,
Speaker 2: some will do annual checks, some will do quite frequent check.
Speaker 2: It depends on the res appetite,
Speaker 1: right? So this is both for existing employees,
Speaker 2: existing employees and those new onboarding candidates,
Speaker 1: right?
Speaker 1: Ok. When a company does a credit
Speaker 1: check on an individual, be it an existing employee or
Speaker 1: a new employee, is there a limit that they cannot breach?
Speaker 1: For example, someone who scores above an age? But you're
Speaker 1: not an A a either perhaps like ad or an
Speaker 1: F is that something that raises red flags for companies?
Speaker 2: Different banks of different organizations have different risk appetite. So
Speaker 2: it depends on what they are looking
Speaker 2: at.
Speaker 1: Ok. What do they pay attention to normally
Speaker 2: usually is account status history, any aggregated
Speaker 2: outstanding balances and the amount of credit facility that you have.
Speaker 2: Of course, the more credit facility you have there is
Speaker 2: a chance for you to miss payment or forget your payment,
Speaker 2: which would eventually affect your credit behavior.
Speaker 1: Ok. Aside from companies, banks are also able to access
Speaker 1: our credit reports. Is that correct? They still need your
Speaker 1: permission to do that.
Speaker 2: Just
Speaker 2: like when you apply for a credit card, you do
Speaker 2: sign authorization for them to pull your credit report. So
Speaker 2: without any authorization,
Speaker 2: the bank is unable to do
Speaker 2: so.
Speaker 1: Ok. So I've seen my credit report before as I
Speaker 1: mentioned earlier and it's a really technical sheet, right? A
Speaker 1: piece of paper with a lot of courses, a lot
Speaker 1: of digits. So let's talk about how to read a
Speaker 1: credit report. First and foremost, what's the most important data
Speaker 1: point to zoom in on?
Speaker 2: Yeah, so I have a credit report here with me
Speaker 2: right now.
Speaker 1: Ok, a sample, right? So of
Speaker 2: course it's a
Speaker 1: lot of words. Yeah,
Speaker 2: so the first page is just your person
Speaker 2: data personal details. We will focus more on this account
Speaker 2: status history, right? So for the first year, we will
Speaker 2: show the type of credit facility you have such as
Speaker 2: bank loans, credit cards, and unsecured credit. So any mortgages
Speaker 2: loan will also appear in this
Speaker 2: section.
Speaker 1: Yeah, I see H DB loan there as well. Yes.
Speaker 1: So obviously each month that you pay your loans, your
Speaker 1: credit cards, that number is going to change every month, right?
Speaker 1: So what else am I seeing on this credit
Speaker 1: report?
Speaker 2: Yeah, you will see that there is this section
Speaker 2: under previous inquiry, you will see that. Ok. The bank
Speaker 2: is reviewing on you on your existing credit facility or
Speaker 2: if there is any new application. So for this new application,
Speaker 2: we have to take note that we should refrain from
Speaker 2: apply too many new credit facility at a short period
Speaker 2: of time?
Speaker 1: Ok. What do you mean by short? How short
Speaker 2: is short, how short it depends on the risk appetite
Speaker 2: from the bank. So if a person applying, for example,
Speaker 2: can credit facility within one month. So it shows that
Speaker 2: this person
Speaker 2: by a lot of credit within a short period of time, right? Yes.
Speaker 2: So it will more or less affect the credit score
Speaker 2: if you have too many new application in this section.
Speaker 1: Ok, so don't apply for too many credit facilities in
Speaker 1: a short period of time. Ok. What else do you
Speaker 1: think is the most important data point here in the
Speaker 1: credit
Speaker 1: report?
Speaker 2: Yeah, actually all the parts plays a little role in
Speaker 2: achieving the credit score. So there is also a section
Speaker 2: showing aggregated outstanding balance and your monthly install.
Speaker 2: Ok. Yes. So these are the aggregated outstanding balance which
Speaker 2: the lenders can tell. Ok, what is the current total
Speaker 2: outstanding that you have with all the banks and fis?
Speaker 2: Why
Speaker 1: is this important to the people who are viewing this report?
Speaker 1: Is it meant to show that I am paying my
Speaker 1: bills regularly?
Speaker 2: Yeah, so to assess the person credit worthiness, whether did
Speaker 2: they pay on time all the time and whether can
Speaker 2: they afford within their credit limits?
Speaker 1: And obviously we know that paying our bills in full
Speaker 1: is a big benefit
Speaker 1: to us if we don't pay in full and we
Speaker 1: roll that credit. But we are regular payers. That's also ok. Right.
Speaker 2: Yeah, that will be ok but
Speaker 1: not advisable, not
Speaker 2: advisable because this will also be reflected in the account
Speaker 2: status history, full payment or not. So if there is,
Speaker 2: and throughout it means that this person has not been
Speaker 2: paying full every time, right?
Speaker 1: Ok. And that's a pretty big warning as well, right?
Speaker 1: For whoever's reviewing the credit. Ok. So if we have
Speaker 1: have a less than sparkly credit report, right, you will
Speaker 1: find that we are unable to apply for a new loan,
Speaker 1: for example, because our credit reports not looking very good.
Speaker 1: How would you recommend we use our credit report to
Speaker 1: review our own financial habits?
Speaker 2: Of
Speaker 2: course, if we are in debt, we need to try
Speaker 2: to prioritize which are the credit facility that we need
Speaker 2: to pay off first. For example, if credit card is
Speaker 2: the one that imposes more interest rate, we should pay
Speaker 2: the credit card first so that the interest will not
Speaker 2: be rolled over to become snowball amount, which we are
Speaker 2: unable to pay. If the amount becomes snowball and we
Speaker 2: are unable to pay. And the bank loaded a default,
Speaker 2: then it will be reflected in this default section. Ah,
Speaker 1: and the default is a bankruptcy as well or is
Speaker 1: that
Speaker 2: different? Is different? It's just that they are unable to
Speaker 2: pay off the credit facility and they will negotiate with
Speaker 2: the bank to come up with a settlement amount.
Speaker 1: Ok.
Speaker 1: The other thing that I discovered is that
Speaker 1: the fact that I have no credit and that can
Speaker 1: actually be a bad thing. So when you don't have
Speaker 1: enough of credit activity and the credit report gives you
Speaker 1: a grade, is that grade an A a or an hh,
Speaker 2: so it wouldn't be fall into this a A to
Speaker 2: hh range. So it will be classified as a non
Speaker 2: score risk grade which the consumer will be awarded with
Speaker 2: AC X score AC X. Ok. So it defines that
Speaker 2: it has an insufficient credit history to enable
Speaker 2: the credit score to compute a score for this individual.
Speaker 1: Ok. So is this CX grade good or bad?
Speaker 2: It
Speaker 2: depends on the lenders, what they are looking at it
Speaker 2: basically tell the lenders that this person does not have
Speaker 2: a credit profile at all. Yeah, probably a fresh
Speaker 2: grad.
Speaker 1: Ah I see or someone like me who took long
Speaker 1: to pay off a debt and then just didn't have
Speaker 1: any more credit cards after that.
Speaker 2: Right? Bear in mind that if you just rebuild your credit,
Speaker 2: that's
Speaker 2: fast track to it because it takes time to rebuild
Speaker 2: your credit in the credit report. It shows the past
Speaker 2: 12 cycle at a point of time when you retrieve
Speaker 2: a report. So we have to slowly build up the
Speaker 2: credit score and it depends on individual because the credit
Speaker 2: score will look into all parts of the reports, not
Speaker 2: just only on the account status history. It will look
Speaker 2: in the profile as a whole.
Speaker 1: The credit report shows a 12 month cycle. Correct. How
Speaker 1: often does the grade change see if certain time a
Speaker 1: certain duration of time has
Speaker 1: and you've not paid?
Speaker 2: Ok. The score will be only generated if you put
Speaker 2: out your own report at a point of time. When
Speaker 2: you did not put out your report, the bank will
Speaker 2: continue to load the payment cycle and there wouldn't be
Speaker 2: any score,
Speaker 1: right? So if I buy my report in January, it
Speaker 1: gives me that score for that period. It just reflects
Speaker 1: the live score and then later on if and then
Speaker 1: I don't pay by my bills for about two months.
Speaker 1: So by the time April comes around and I download
Speaker 1: my April credit report, then it will
Speaker 1: show a different
Speaker 1: score.
Speaker 2: It may or it may not depends on your credit behavior.
Speaker 2: For example, during that period, did you apply any new
Speaker 2: credit facility applying too many credit facility during a short
Speaker 2: period of time will also impact on the score?
Speaker 1: I
Speaker 1: understand that it takes some years for your sort of
Speaker 1: record to be clean again after you've paid off your debts.
Speaker 1: And you did say rightfully that the Credit Bureau looks
Speaker 1: at how you grow that credit again, right? Which is
Speaker 1: an indicator of financial health. Why does it take so
Speaker 1: long?
Speaker 2: Different consumer have different
Speaker 2: issues of repaying that debt. Probably some miss a few cycles.
Speaker 2: So they take shorter time to rebuild. But for example,
Speaker 2: for some, they have been missing for the past 12
Speaker 2: cycle and did not make payment in full, which explain
Speaker 2: why they need longer time to build up their credit
Speaker 2: profile.
Speaker 1: So maybe answer this question that I have then why
Speaker 1: is it important for us to have some kind of
Speaker 1: credit on our name? Yes.
Speaker 2: So that we can see whether is this person a
Speaker 2: good payment master or not, whether can they pay on
Speaker 2: time every time? And also how good are they in
Speaker 2: managing their
Speaker 2: finances?
Speaker 1: Ok. So how often should we be checking our credit health?
Speaker 1: How often should we be paying this $8 and downloading
Speaker 1: this credit report?
Speaker 2: I feel that you yourself would know that whether you
Speaker 2: have been paying or not. So if you have been paying,
Speaker 2: then your score would definitely be improving.
Speaker 1: Um ok. How often do you check your credit
Speaker 1: report?
Speaker 2: To be honest, I don't do checks on my own
Speaker 2: credit
Speaker 2: report.
Speaker 1: Yeah, because you are very confident of paying your bills
Speaker 1: on time. Yeah. Ok,
Speaker 1: exactly. Is a good time for us to download our
Speaker 1: credit report? I imagine when you're about to spend the
Speaker 1: big bucks right on a house or a car, for example.
Speaker 1: Would that be an example?
Speaker 2: Yes, of course. We will not get the credit report
Speaker 2: until the time that we need it as mentioned earlier on.
Speaker 2: We can actually download the report any time so that
Speaker 2: you can understand your credit health and see how can
Speaker 2: you improve on your credit score.
Speaker 1: And that's before. Yes, you have or when you have
Speaker 1: intention of buying a flat or a house or a car, right? So,
Speaker 1: so Kwan, do you have any final notes about what
Speaker 1: is it about a credit report that we need to know?
Speaker 2: It is important to maintain a good credit score so
Speaker 2: that it won't affect your employment. It won't affect your
Speaker 2: credit application.
Speaker 1: Ok.
Speaker 1: On this podcast, we've been advised by numerous guests, the
Speaker 1: importance of paying your bills, especially high interest credits to
Speaker 1: summarize good credit
Speaker 1: health. Just like our physical health. It is a reflection
Speaker 1: of how well we are in control of our finances.
Speaker 1: It's also a positive signal to creditors and companies that
Speaker 1: you are a reliable trustworthy borrower who always honors your
Speaker 1: debts and that has ripple effects when it comes to
Speaker 1: your jobs and access to loans in the future as well.
Speaker 1: Who doesn't want a clean sheet? Having a good credit
Speaker 1: record actually helps you more than hinders you.
Speaker 1: So, Kwan, we have a segment called Questions from a hat.
Speaker 1: So there are mystery questions in here. None of them difficult.
Speaker 1: Don't worry. This is the fun part of the podcast.
Speaker 1: You'll have to pick a question from this hat. So
Speaker 1: just pick one hand it to me and then I
Speaker 1: will ask you the question.
Speaker 1: All right. So Kwan, what financial advice would you give
Speaker 1: to your 20 year old self?
Speaker 2: 20 year old self? Ok. I think if, when I'm
Speaker 2: 20 years old probably I can apply a credit card. Yeah.
Speaker 2: So at that point of time I would tell myself
Speaker 2: to spend wisely and spend within our own means so
Speaker 2: that my credit score will be good. But of course,
Speaker 2: at that point of time, I wouldn't
Speaker 2: take a copy of my credit report yet.
Speaker 1: Neither
Speaker 1: did I and I probably don't think a lot of
Speaker 1: 20 years out there would do the same. So Kwan,
Speaker 1: it's been a pleasure. Thank you so much for coming
Speaker 1: on the podcast today. Thank you. And hey, listen up,
Speaker 1: we hope there was something in this conversation that was
Speaker 1: useful that taught you something about checking in on your
Speaker 1: financial health. It doesn't hurt to go into triple W
Speaker 1: dot Credit bureau.com dot SG. That's where you can download
Speaker 1: your credit report for just $8. If you have any
Speaker 1: thoughts or questions about
Speaker 1: this episode, please just send us a message. Money Talks
Speaker 1: is available on Apple Podcast, Spotify and youtube music. Don't
Speaker 1: forget to rate us if you're enjoying the podcast. Big
Speaker 1: thanks to the team Christina Robert Tiffany, Ang, Jaini, Johari,
Speaker 1: Joanne Chan and Sa Wind. I'm Andrea Heng. Thank you
Speaker 1: for listening to Money Talks.