Step 1: Find direction ratios.
From $A(3,4,-7)$ to $B(1,-1,6)$ the direction is $(1-3,\ -1-4,\ 6+7) = (-2,-5,13)$.
Step 2: Use point A.
With base point $A(3,4,-7)$ and the parameter $\lambda$, write each coordinate.
Step 3: Write the parametric form.
$x = 3 - 2\lambda$, $y = 4 - 5\lambda$, $z = -7 + 13\lambda$.
\[ \boxed{\text{Option 4}} \]