I do character-building sessions at schools, walking the students through the steps of designing a believable and interesting character. They determine the background first, then the personality type and traits, then physical attributes, and fill in small details last.
A book I highly recommend to the students is "Personality Plus" by Florence Littauer. It covers in depth the strengths and weaknesses of the four basic personalities - choleric, phlegmatic, sanguine and melancholy.Another book that ties in well with this is "The Birth Order Book" by Dr. Kevin Leman. The four personalities can be seen in the qualities of the oldest, middle, youngest, and only child.
Once you have determined your character's personality type, it becomes much easier to have them react to situations and people in a believable fashion!