Can't speak for every country, but in Sweden for example tax data to a certain level of detail (income by labor, income by capital) is publicly available for each citizen. Same for debts. And debts that go to the collection authority, which has a very dark name (kronofogden), are very public and somewhat worse than having to wear a scarlet letter. So credit institutes have enough of an idea of your finances to decide your rate.

In some countries a credit score is a mysterious value calculated by a private company based on patterns of consumerism and money usage that greatly affects your life. You must earn the score through engaging with other private companies, to the company's profit. This is why in the US & UK people get credit cards early, to improve their score whilst trying to avoid the debt trap.

In Scandinavian countries there are registries of your income (from the tax authority), your debts (including buy now pay later which are technically flexible loans) and any bad debts you have that have gone to debt collection. No history of previous balances, repayments, how long you've had a credit card, etc... Companies use this to come up with a score, either themselves or a company like Bisnode will do it for them. So basically it's a simpler calculation based mainly on current situation than history.

Banks are required to prove their loans are affordable. They can only lend someone an amount that they can prove the borrower can afford.

In my experience, rates are not low in the U.S. They are high because high risk loans are able to be granted.

The availability of debt for things like housing and cars is very complicated, but high taxes, a high degree of education, livable minimum wages, and realistic employee rights helps increase stability and decrease risk. I don't say it to be flippant. It is more complex than even I understand. It's only to say that, given that these systems are designed artificial systems, there are multiple implementations that work under various constraints and incentives.