How do banks set interest rates for personal loans?

[adelpit]

How do banks set interest rates for personal loans?

This article on Investopedia is excellent but it doesn't answer the question to my satisfaction.

We all know banks check your credit. The stated purpose of the loan has an impact. I changed the purpose I was requesting a personal loan  'pay a tax bill' to 'other' and they raised the interest a fraction of a percent.

The article states that a borrower's history with the bank and the products they use have impact.

Do banks also look closely at borrowers' account activity? I would think so! Are bounced checks, late utility payments, even the people and places I write checks to factors in setting loan interest?

What about background checks? Do banks typically do them on loan applicants? What else?

[tcbofade]

I cannot speak of YOUR bank, and I truly believe that the answer may be different with every different financial institution.

I've got two credit unions with clearly posted rates, and the rates are dependant on TU Fico 8 score only.  

[Anonymous]

There's also the fact that what's in a person's CR detemines the APR, not just their score. Two people could have the exact same score, yet one of them might have a couple old dings, thus increasing the interest rate for that person.