Why would a bank want to know your credit history for a loan?

To confirm whether you have a good or bad credit risk.

Explanation:

Banks checks credit history to determine whether a loan be granted for a number of reasons, one of which is to confirm good or bad credit risk.

A credit history shows the record of credit usage, including the amount borrowed, how often repayment is made and what type of credit was requested.

Banks uses credit report from any of the three approved credit reporting agencies to check history of the credit hence determines the basis for approval or rejection of new loan being sought for.