This means, if you are five days late paying your credit card bill or personal loan repayment, it could be recorded on your credit file for all potential lenders to see.

Currently, only payments that have defaulted – that remain unpaid for more than 60 days – are recorded on a person’s credit file, but the changes coming into place next March will mean there is much more information recorded on each credit file.

What changes are being made?

Credit card and loan repayments more than five days late will now be recorded as “not made”, while payments more than 60 days late will be recorded as a “default”.

The recording of payments to utilities and telecommunications companies, however, will remain unchanged – with only defaults of more than 60 days being recorded.

The changes will also mean the outcome of each credit application is recorded. Currently, only applications of credit are noted on a person’s credit file – not whether the application was approved or declined.

When the changes come into place in March, all applications for credit – whether for a credit card, personal loan or mortgage – will be recorded on the applicant’s credit file, along with whether the application was successful or not.

Potential lenders will also be able to see the applicant’s payment history on each credit account, and any credit limits that have been applied to the account.

The payment history of each applicant’s credit history will also be backdated. Despite the changes only coming into effect next March, when the changes are introduced, the applicant’s payment history from December 2012 will be included in their credit file.

Why the change?

Lenders have long called for more in-depth information to be held within borrowers’ credit files, with the claims that more knowledge about an applicant’s credit history will make it easier to assess their credit-worthiness.

This in turn, will help the industry to lend more responsibly – as lenders will be able to easily identify borrowers who have problems with credit, who cannot manage their debts.

Director of consumer risk solutions for credit ratings agency Dun & Bradstreet, Steve Brown, said, “Lenders are looking at a range of issues and one of them is whether someone has got the capacity to repay.”

“The new system will allow credit providers to see which accounts were approved and are currently available to the individual, rather than just the applications they’ve made. It gives them a much clearer picture of how much credit was approved and how much more an individual can afford to take on.”

“If people are already over-committed, what [lenders] are going to be able to see is a situation where people aren’t meeting their existing commitments.”

What will it mean for late payers?

Currently, if you have black marks on your credit file, it can make it more difficult to get approved for credit in the future, and if you are approved, it can mean you pay much higher interest rates as you are seen as “high risk”.

Creating more opportunities to gain black marks will make it even more difficult to keep a clean credit file – something lenders could take advantage of.

Principal solicitor of the Consumer Credit Legal Centre NSW, Katherine Lane, said recording payments five days overdue was too short a period of time.

“What if [the missed payment] is because of a bank error or the house is flooded or someone has stolen your mail?” she said. “There needs to be a concept of fairness when it is not your fault. Why should a missed payment that is not your fault reflect on your creditworthiness?”

John Dickinson of credit repair company Clean Credit agreed, saying, “Recording a late payment in as little as a week is unfair for people because I think it makes managing their cash flows extremely difficult.”

“We know the damage it can cause when people actually have a negative listing on their credit file, it can potentially stop them getting credit for years.

If you want check your credit file, you can apply online from a credit reporting agency such as Veda or Dun & Bradstreet. It’s a good idea to check your credit file before you apply for credit, and to have any mistakes corrected before you apply.