Currently, lenders are allowed to know about a consumer's application for credit during the past five years but not if the borrower has been able to pay the bills.
Under the proposed changes, banks and lending institutions will have information about the number of loans a consumer has, how reliable they have been with repayments and how much they have borrowed.
Banks could then use that information to refuse additional credit.
"A simple change to the credit reporting laws will allow credit providers to check a borrower’s current credit commitments and repayment history before additional credit is granted," said Russell Evans of credit agency Veda Advantage.
Cabinet Secretary Joe Ludwig said on Wednesday the government would accept some privacy law changes proposed by the Australian Law Reform Commission (ALRC) in August 2008.
"Today I am announcing the government's intention to effectively rewrite the commonwealth Privacy Act 1988 for the 21st century, the most significant reform to it since its inception," Senator Ludwig told a privacy professionals forum in Melbourne.
"Currently, Australia's credit reporting system provides only half the picture of an individual's credit report," Senator Ludwig said.
A spokesman for the ALRC said present consumer credit check laws were among the most restrictive in the world.
Mr Evans said the changes would enable lenders to make an "informed decision" on giving credit.
"Allowing access to better lending information on credit reports will help protect the lender and any vulnerable Australians who are at risk of being caught in a debt trap," he said.
Veda released data on Tuesday showing one in six Australians have trouble repaying their debt.
But Consumer Action Law Centre chief executive Catriona Lowe said giving lenders more information about a consumer's credit repayment history would only encourage them to lend more.
"Of course we agree that we don't want consumers getting into more debt," she told AAP.
"The question is whether these sort of reforms will have that effect."
Under the proposals, the Privacy Commission will also have the power to make public and private sector agencies develop a privacy code, or follow an imposed one, if lots of complaints are made about them.
Privacy policies are voluntary under the present system but the government wants the law changed so groups can be prosecuted for breaching their privacy codes.
Australian Privacy Commissioner Karen Curtis said this would allow more flexibility in dealing with complaints.
The federal government accepted 141 ALRC recommendations of the 197 it responded to.
A spokeswoman for Senator Ludwig said public consultation on proposed privacy law changes would be held in early 2010.
money.ninemsn.com.au 15 Oct 2009
This is another step towards the gradual 'enslavement' of society.
All these proposals are geared so Corporations and Governments will have an unobscured view into your life.
There is NOTHING anyone can do about it.
The politics of globalisation (New World Order) are too strong for mere mortals to resist.