Over the years General Motors dealers have been able to count on GMAC, the lending company owned in part by GM, to provide loans to car buyers at their dealerships.

Before the economy started its nosedive, GMAC-originated loans provided financing for almost half of GM car buyers. But now that the company is concerned about stability, GMAC is cutting back on who it will give loans to. In a letter dated Oct. 13, it announced to all GM dealers that it would no longer make vehicle loans for anyone with a credit score below 700, this coming on the heels of previous cuts which have already cost GM 10,000 buyers a month.

Any move to tighten up credit restrictions by a major corporation will affect parties in different ways; we are going to look at how it will affect the major players below.

• GMAC
• Consumers
• Dealers
• Banks and Credit Unions

Politicians, economists, columnists and bloggers have offered numerous stark predictions about how the current financial crisis and government bailout will affect average Americans. But the truth is that Wall Street's crisis, which kicked off September 15 with the fall of Lehman Brothers, Merrill Lynch and AIG, is already affecting Main Street.

We list eight ways your finances are already being affected by the current financial meltdown:

Credit card limits reduced:
Even if you have a high credit score and a blemish-free payment history, your credit limit may have been cut. American Express recently cut the credit for 10% of its cardholders, but most banks have reduced credit limits for some customers since last summer. If you are making a big purchase or use your credit card for unplanned expenses, be sure to check your limit. There are big penalties for going over it.

Student loans harder to come by:
It's not just banks and mortgage lenders that are suffering. The student loan industry is in crisis. Private lenders are going under and some state agencies and large banks, including Bank of America and Wachovia, have stopped issuing student loans. Some schools are being more forgiving on payment schedules as students scramble to secure funding. Call the student aid office for help, but expect less favorable terms than prior years.

Money market mutual funds safer:
To stave off investor panic after one prominent money market fund "broke the buck," or posted a small decline in value, the government has promised it would cover any losses. Not all funds are covered in the new program, so check with your fund company if you are worried. With this added protection, money market funds are now just as safe as bank savings accounts.

More incentives to open bank accounts:
One result of the credit crisis is that banks are trying their darndest to attract more deposits. Chase is currently offering $125 (at least in New York City) to open an account with direct deposit. Citibank is beefing up its "Thank You" rewards program. Refer a friend, and Bank of America will give you both $25. Remember, low fees and high interest on savings are more important than one-time incentives when choosing a bank.

Easier to get a loan if you have good credit:
Don't forget, even in the current crisis, banks want to stay in business. So they are continuing to make loans to borrowers with with good credit records and plenty of assets. There are good deals on home equity lines of credit and businesses have found short-term loans easier to come by since the bailout talks began.

Harder to get a loan if you have weak credit:
If you have a tarnished credit history, don't expect to get a loan any time soon -- even if you're willing to pay high interest rates. Banks continue to tighten their lending standards as the credit crisis deepens. If you need to rebuild your credit score, a good way to start is by using a secured credit card (one where you have cash in a bank account to back up purchases).

More deals at stores in preparation for weak holiday spending:
With the economy slowing and family budgets tightening, retailers are anticipating a tough holiday sales season ahead. So they are layering on the deals early. Black Friday, the day after Thanksgiving when the holiday shopping season kicks off, should provide a bonanza of deals. Consumer electronics will offer particularly good buys.

Investment returns are down:
The stock market has taken it on the chin in recent weeks. But sharp sell-offs on bad news have been followed by major relief rallies a day or two later. The worst thing you can do is panic and sell at the bottom. Instead, make sure your investments are diversified and use the upswings to sell some stocks if you realize now that you've taken on more risk than you can handle.

I was late paying an unexpectedly large bill for my son's birth; I'd wrangled a bit with the insurance company over one of the charges, and before you know it, I was getting calls. I finally connected with someone over it and the kindly-but-scripted collections woman started in with the fearmongering.

"If you don't send a payment today we're going to have to report you to the credit agency!" she said with urgency. "We haven't reported yet, but we will." She wanted one payment that minute, another at the end of the month, only six days away. Talk about your high pressure.

I was calm, because honestly? I don't care. Let me rephrase: I certainly want to pay all my bills, and I do plan to schedule those payments when I can afford them. But I don't care if my credit suffers.

Many consumers are aware that their credit history can have a big impact on their lives, and the effects reach beyond the home mortgage, the auto loan, and the credit card. Credit scores have long been used by insurance companies in determining the premiums you pay. Hospitals are starting to look at credit histories before providing some types of care.

And now the credit scoring mystery gets a little stranger. The FTC is suing CompuCredit, company that provides credit cards to people with poor credit. The FTC is alleging that the company uses unfair practices in its proprietary system of credit scoring for its customers.

For CompuCredit, it doesn't just matter how long you've had an account, whether you've made your payments on time, or whether you've exceeded your credit limit. They also include factors in their scoring system based on what you're buying with your credit card. And they're cutting off customers who use their credit cards at massage parlors, bars, billiard halls, and marriage counselors.

Finance experts will tell you that it's important to keep a close eye on your credit record, for a number of reasons. First of all, a good credit history is the key that opens many doors for you. Not only does it mean you'll have a better chance of buying a house and getting a good rate on a loan, it also has other implications.

Your credit history determines whether you're eligible for a credit card, what your interest rate will be, and whether you qualify for any special promotions. Some employers will do a credit check before hiring you, so that's another place a good credit record comes in handy.

Insurance companies check your credit and factor that in when determining your rates. Better credit means better insurance rates. It's also important to keep an eye on your credit record to make sure no one has stolen your identity and that no credit card company has made a mistake in reporting your activity to the credit reporting agencies.

Our man Abelicio Padilla has been blogging about his personal financial situation and he has been seeking advice for making sound money decisions. I wrote this piece as my input into his situation. If you'd like more background before you proceed, read Abelicio Padilla's interesting blog posts here.

Now here's my input:

It sounds like you have a plan Abe. However, I'd like you to think a little more about if you really want to sell that house. The market is down right now which means you probably won't get your best selling price for it. Also, did you consider that if you sell the house, you'll lose your mortgage interest deduction when you file your taxes? That deduction loss will cut into the monthly savings you expect to get by selling. Even though you won't notice it month to month, you'll feel it when you file your yearly income taxes. Consider also the upset that moving can cause. It's expensive. It will disrupt operations. In the long run It could cost you more than you think.

Are you struggling with high interest payments and want to find out the best strategies to get out of debt? Are you afraid of losing your home? Do you want to know how you can improve your credit score? Post any questions you have below and I'll answer as many as I can.

I'll introduce you to debt payoff strategies to help you get out from a mountain of debt or recommend a source you should ask for help. Don't just hide your head in the sand. Start to take charge of your financial future today!

Lita Epstein, MBA, has written more than 20 books on personal finance including "The Complete Idiot's Guide to Improving Your Credit Score" and "The 250 Questions You Should Ask to Avoid Foreclosure. This column is designed to provide information about getting out of debt that will be relevant to a large group of readers. If you require legal service or other expert assistance, please seek the services of a competent professional.

Most credit cards with variable rates have their rates tied to the prime interest rate. That rate has been going down, but consumers are still seeing their credit card interest rates rising. How can that be?

For consumers with good credit, their credit card rates will usually fall as the prime interest rate falls. But those consumers whose credit is suffering will not see the same benefit. Particularly if they are behind on their debts or doing other things that negatively impact their credit scores, they will likely see an increase in credit card rates.

So if you've got a credit score of 700 or above, expect to see your interest rates on your credit cards go down. If your score is lower or you've been experiencing debt troubles, watch your rates carefully. They're likely to be on the rise, which could put you even deeper into trouble. You typically have the right to refuse the rate increase, but you'll have to pay off the account and close it. Play the credit card game wisely.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

Ken and Daria Dolan, America's First Family of Personal Finance, answer your money questions every Friday.

Ken and Daria,

My credit score is 657. My wife and I want to refinance our mortgage, but we need a higher score to get a good interest rate. What can we do to boost our credit score before we talk to our lender?

Joe

Ken and Daria Dolan offer more advice on living credit smart in their new special report,"8 Secrets Your Credit Card Company Doesn't Want You to Know." Download it now.

Click here to ask Ken and Daria your question.

Are you thinking about buying a home, but you need to improve your credit score in order to get the best interest rate? Paying down debt using the round robin strategy can get you there the fastest. People with the best credit score only use 10% to 20% of their available credit, so the faster you can pay down your debt on each card, the better your credit score will be. (If you're looking to minimize your interest and a quick improvement in credit score doesn't matter, then use the snowball effect strategy instead.)

With this strategy you first focus on paying down all your credit cards to a debt level of about 30% of your available credit. For example, if you have a credit line of $3,000, to be at 30% utilization the maximum balance you should have on that card is $900. When you get all your cards paid down to 30% utilization, then start working on getting them down to 20%. Once they are all at 20% utilization then start paying them down to 10%. Your final round robin stage will be to pay off the cards completely. When you reach the 10% goal your credit score should be up by at least 30 points and could be up by as much as 70 points. If you've had a history of late payments and are now paying your credit cards on time, your credit score could improve by as much as 40 points.

Will that make a big difference when applying for a mortgage? People with a credit score of 730 or higher get the best interest rate offers. As long as your credit score is above 730 there's no reason to worry. Even if you push that score higher you won't likely get a better offer. But if your credit score is below 675 you will pay almost 2% more interest on a mortgage loan, which will mean thousands of dollars more in interest over the life of that loan. If your credit score is below 620, expect to pay 3% to 4% more interest on that mortgage loan. So taking the time to get your score up using the round robin strategy could make a huge difference in the loan packages you'll be offered.

Bankrate.com has a credit score estimator provided by FairIsaac, the company responsible for calculating your credit score. Now before you run right over there to use the tool.... beware that I think this is just a gimmick to convince you to pay for your actual score. Don't do that! They're charging $15.95 or more, depending on the product you buy, and I think those products are a ripoff.

But if you want to get an idea of where your current credit score might fall, this is a good tool. I tried it out, and it was accurate. You could also use the tool to get an idea of where your score might fall if you make some improvements to your credit history.

The tool will ask you about your loans and credit cards: when you got your first one, what percent of your available credit has been used, whether you have delinquent payments. Again, this is a good tool to get an idea of where your credit score currently is. Just don't get sucked into buying the products they're offering.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

Fair Isaac Corp, the company that created FICO credit scores, is changing its calculations in 2008 (subscription required). The company says that the new scores will be better at predicting the likelihood of defaults on debts. They say the new system will reduce default rates by 5% to 15%.

The new credit scores, called FICO 08, will supposedly be impacted less by rare credit mistakes by consumers. But those who repeatedly make credit blunders will be treated more harshly. The scoring system will still analyze payment histories, available credit, length of credit histories, and the number of inquiries and new accounts.

Delinquencies on accounts will now be analyzed a little differently. In the past, a delinquency was a delinquency. Under the new system, major and minor delinquencies being looked at more carefully and scored accordingly. Consumers with multiple delinquencies will also be treated more harshly than those with only one or two.

Fair Isaac says that 90% of the largest banks use the FICO score in their lending process. The scores are also used by companies offering insurance, utilities, and cellphone service. The new credit scores will be put into play by spring.

Forensic accountant Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations through her company, Sequence Inc. Forensic Accounting. The Association of Certified Fraud Examiners honored Tracy as the 2007 winner of the prestigious Hubbard Award and her first book, Essentials of Corporate Fraud, will be on bookshelves in March 2008.

Parents used to be able to assist children with building a good credit score by adding them as an authorized user on a card. In the past when you were an authorized user on your parent's cards you were able to borrow their good credit rating as well. When giving someone a rating FICO would essentially attach the credit records of people who listed you as an authorized user to your credit history. That way a child who wanted a card could first be added as an authorized user on their parent's card and then when the child applied for his or her own credit card, the parent's credit history was used to give that child a good credit score even though that child had no individual credit history.

Well that can't happen anymore. FICO closed that route about a year ago because they found people were actually making money by adding others to their credit cards as authorized users (for a fee, of course) to help people with bad credit ratings get good ones. You may still get a scam email promising to fix your credit score. If someone says they can fix your credit score quickly for a fee, run, don't walk away.

Unfortunately, if you do have a bad credit score there is no quick fix unless that score is based on inaccurate information. For example, if you look at a copy of your credit report and see credit items that are not yours or that do not accurately reflect your payment history, correcting those errors and getting them off your report can improve your score quickly. But, if the information on the report is accurate, the road to improving that score can take a long time.

This is Part 2 of Lita Epstein's series Busting the Credit Score Myths. For Part 1, check out Closing Cards to Improve Credit Score. Be sure to check back with WalletPop for the rest of the series later this week!

Lowering your credit limits definitely will not help your credit score. In fact in most cases this request will likely hurt your credit score. That's because credit scoring companies use what's called the debt utilization ratio.

The way this works is that the credit card company will total all your credit limits. Then it will total your outstanding debt. Suppose you have $20,000 total credit available to you on four cards of $5,000 each. You carry a total of $6,000 in debt on those cards. The debt utilization ratio would be 30% ($6,000/$20,000).

Now suppose you close one of those cards and your total credit available is $15,000 but you still have $6,000 in debt. Now your debt utilization ratio would go up to 40% ($6,000/$15,000). That move could actually lower your score by 50 to 100 points because it looks like you're getting yourself into deeper credit trouble when the credit scoring agency computers calculates the debt utilization score.

If you want to improve your credit score, don't close cards, but do pay down your debt as quickly as possible. People with a debt utilization score of 10% to 20% get the best credit scores as long as they are paying their cards on time.

You do need to use credit cards even if you pay them off each month. If you don't have a credit history you'll find it very hard to get a major loan when you need one.

Lita Epstein has written more than 20 books including the Complete Idiot's Guide to Improving Your Credit Score.