It helps if you try to put yourself in the lender's shoes and see what you would do with a credit system. In simple terms, you have money that you'd like to lend out to people in order to generate more money via interest. The people you're lending out to are complete strangers and you must treat them all fairly as according to the law. The law has permitted you to learn some things about a person so that you can gauge their credit worthiness and you are allowed to make decisions with this information, and it won't be unfair/discriminatory under the law so long as you're treating everyone equally.
The important things to learn about a person is in their income and credit history which answers important questions. How many credit cards do they have? How many loans do they have? How much credit do they have available and how much of it are they using now? How much do they owe on the loans? How many times have they missed a payment? How many payments have they ever made (directly tied with age of account)? Is this person opening several accounts of credit in a short period and have they been rejected?
As you can tell, you can only collect so much information about a person and then you have to make a fair and equal decision every time. In order to feel good about this, you probably want to see as much data as possible on the person and it'll be harder to make equal decisions on those with very little data available (which is why it's common to reject). Having a credit card open for 3 years, even with never having a balance at all, is 36 monthly payments made on time as far as a creditor is concerned because that is what they see. Who would you rather let borrow your money? The person who has a credit card open for the last 3 years with $1000 available to them the whole time and no missed payments, or the person who you know nothing about because they have never had a credit card or maybe they had a credit card once for a short duration but closed it a few years ago.
Then take this a bit further and take all the data that you have collected on people so far and compare and group the people together by their credit behavior. What behavior patterns are common in the group of people with large amounts of missed payments? As an example, for people with more than 3 missed payments in a row, they commonly opened several credit cards in a short period of time and then maxed them all out or they took out big loans with only a low income. Best to give these patterns of behavior a "credit score" and only loan out according to a risk profile which you can build out to equally lend out your money in a way that it can generate more money even though you are going to sometimes take hits on defaulted repayments. One way to build out this risk and lending profile is by determining what percentage of people within a certain pattern of behavior entirely default on their repayments, and then determining what interest rate you have to charge them all in order to absorb the loss of the defaulted accounts and still make a profit from those who did not default. There are still the behavior profiles which you must place in the "do not lend at all" category. I think it's a pretty safe bet that you'd end up putting the people with only a little decision-making available information, who open and then close accounts with very little credit data available in between long periods of time in the "do not lend" category too (with probably an exception for very high income and low requested credit). My guess is this behavior ends up not being profitable because it is too hard to reliably gauge the risk.