The first one is obvious: If you don’t have an established credit history, then they don’t know if you are a good credit risk.
Insufficient number of inactive credit card accounts: Could that tie into the first one? That is, how many credit cards do you have? If you don’t have any, then there is no history of how well you pay.
Lack of mortgage accounts or insufficient balance for mortgage trades: I’m guessing that if you don’t have credit cards, the issuer will check to see if you have a mortgage. If you have a mortgage that you are paying on, that will provide them with a history of your payment practices.
Insuffcient number of accounts with large Credit/High Credit.: It sounds to me as if they’re saying, “This guy doesn’t have enough cards with a high credit limit. If we give him a high-limit card, how do we know he’ll be able to pay?”
My first credit card had an $800 limit. I also had about $1,000 in the bank. After using that card and paying on it, I was able to get higher limits. When I got my first car loan, my dad co-signed. Paying that off showed that I paid my bills. What the issuer is looking for is evidence that you pay credit when it is extended to you. It’s sort of a Catch 22. You need to show that you have a credit history in order to get the means to build a credit history. You can get a secured card to help build your history, and that might make things easier. You also build credit history by paying your utility bills. (Some people think it’s okay to let them slide, but the phone company, gas company, electric company, etc. do keep tabs on how well you pay and report that information to the credit agencies.)
I work in business credit and not consumer credit. Also, I just look at the data to get it into the database; I don’t make decisions based upon it. Basically, it works like this: There is an account balance bucket that shows how much you owe. There are terms associated with the loan; say, “NET 30” or “Net due within 30 days”. There is a “Current” or “Current & Future” bucket that shows the amount of the balance that is within the terms of the loan. (i.e., it’s not due yet.) Then there are buckets for 01-30 days beyond terms (DBT), 31-60 DBT, 61-90 DBT, and Over-90 DBT (or 91-120 and 120+).
Say I’m Joe’s Pool Service and I want to buy a large amount of chemicals for my business from Freddie’s Chemical Supplies. Freddie’s say’s, “Hm. This guy wants $10,000 of chemicals. Let’s pull a credit report.” They look at the report and they see that you (as a business) have purchased various pool supplies from a number of vendors in the past, and that you have mostly paid within 30 days. Maybe you were late once or twice, but your report shows that you are a good risk. They might say, “Okay. Let’s let him buy the chemicals and pay us within 30 days.” (i.e., they give you a 30-day loan.) But what if you have not been in business for very long, or you have a history of putting off paying for your supplies for a few months? Freddie’s might say, “This guy pays slowly. We’ll sell him $10,000 of chemicals, but the terms have to be Cash In Advance (CIA) or COD,” or , “This guy is new in the business. We don’t know if he’ll be around in two months. We’ll sell to him with terms = PREPAID until we establish a relationship.”
I don’t interact with our consumer credit division, but I assume it works the same way. Credit cards generally have terms like “3% within 25 days” instead of “CIA”. If you don’t have an established credit history, it’s kind of hard to adjust the terms. The only thing they can do is either deny the application or lower their risk (credit limit).
Do you have established credit? If not, were you applying for a high-limit card?