Oct. 14 (Bloomberg) -- GMAC LLC, the lender once owned by General Motors Corp., may deepen the automaker's 18 percent U.S. sales slide this year by limiting car and truck loans to people with the best credit scores.

GMAC said yesterday it's granting financing only to buyers with scores of at least 700, who represent about 58 percent of U.S. consumers. The Detroit-based company, now controlled by Cerberus Capital Management LP, provided 43 percent of GM's second-quarter auto loans.

The move added to the global credit squeeze that threatens to choke economic growth as companies and consumers find it harder and costlier to borrow. Banks restricted lending to auto dealers in New York, New Jersey and Alabama last week, citing unstable debt markets and shifts in strategy.

``Everybody is concerned about risk, because risk has to be controlled, risk has to be conserved,'' said Michael Robinet, an analyst with CSM Worldwide Inc. based in Northville, Michigan. ``This is a way they can have good risk.''

U.S. auto sales appear headed for their lowest annual total in 15 years, according to Deutsche Bank AG analyst Rod Lache. The slide at GM, the biggest U.S. automaker, includes a 23 percent drop in purchases of the vans, pickups and sport-utility vehicles that make up more than 60 percent of its deliveries.

`Incredibly Unusual'

``These are incredibly unusual times,'' GM Chief Executive Officer Rick Wagoner said today at the 100th anniversary celebration of Harvard Business School in Boston. ``All the sudden, somebody blows the whistle and credit stops flowing. It really requires you to say, `Let's think about this business one more time.'''

Credit scores are a ranking of borrowers' ability to repay, as determined by ratings company Fair Isaac Corp. So-called FICO scores range from 300 for very poor to 850 for perfect. About 165 million U.S. adults are rated 700 or better, according to Minneapolis-based Fair Isaac.

GMAC yesterday also raised the rate it charges auto dealers for making loans that aren't part of special incentive programs by 0.75 percentage point. Most loans will be limited to 60 months, the lender said in a letter to dealers.

``The decision was made as a result of the instability in the capital and credit markets,'' GMAC spokeswoman Gina Proia, who is based in New York, said in an interview. ``In order to prudently manage our business, we had to make some changes to prices and underwriting.''

GMAC granted loans to buyers of 298,000 GM vehicles in North America in the second quarter. The company doesn't disclose its business by credit score, Proia said.

GMAC's Revenue

Automotive finance made up 42 percent of GMAC revenue in 2007, up from 29 percent a year earlier. Cerberus bought 51 percent of the lender in 2006 from Detroit-based GM, which still owns the rest. Chrysler Financial, the finance arm of Chrysler LLC also owned by Cerberus, hasn't changed its auto-lending standards, spokeswoman Amber Gowen said.

Reviving domestic sales is pivotal for GM, which has posted $69.8 billion in losses since its last annual profit, in 2004. GM has held early talks about a merger or other partnership with Chrysler, five people familiar with the discussions said. The automakers and Cerberus have declined to comment.

After record gasoline prices sapped light-truck demand, the credit crisis is delivering a second blow to GM and its peers as lenders try to make only the safest loans.

`Tightening Up'

``If you look at industry sales overall, tightening credit has clearly had an impact,'' GM spokesman John McDonald said. ``The credit markets are tightening up everywhere.''

About $25 billion in auto loans were past due in the second quarter, according to figures released Oct. 6 by credit-checking company Experian Automotive. Loans 30 days past due were up 9 percent from a year earlier, and those beyond 60 days increased 11 percent, Experian said in a statement.

Regions Financial Corp., Alabama's largest bank, last week told about 2,600 auto dealers it will stop issuing loans through their businesses after Jan. 1. Capital One Financial Corp. said it will end financing of auto dealers' inventories in New Jersey and New York later this month.

The credit crunch ``dried up traffic in the dealer showrooms,'' said Gerald Meyers, a professor at the University of Michigan in Ann Arbor and a former chief executive officer of American Motors Corp., in a Bloomberg Television interview yesterday. ``Their very business and profits depend upon lending to people with credit that is acceptable.''

To contact the reporters on this story: Greg Bensinger in New York at gbensinger1@bloomberg.net; Alex Ortolani in Southfield, Michigan, at aortolani1@bloomberg.net;

Last Updated: October 14, 2008 11:22 EDT