What are the different Credit Options

Credit can be a fickle beast. Many people simply think of credit cards, but there are actually multiple options available when you are looking to obtain credit.  Thoroughly review all existing options so that you choose the method of credit that is best for you.

Credit Cards

These are the obvious tools for getting credit, but they are often not the best option. Of course, inside this one category of credit there exists an incredible variety. There are secured credit cards, where your money backs the line of credit you have. These can be a great option to establish or rebuild a credit score. Prepaid credit cards are also available, but they have no impact on your score. Traditional unsecured credit cards are another option, and these can provide the credit you need, as long as they are used responsibly.


Loans provide another method of obtaining credit. While most often these are obtained to purchase a car or a home, a loan can be taken out for literally anything that a creditor is willing to finance. Many financial institutions offer unsecured personal loans, which can be an option for minor expenses that don’t fit well in another category or even for consolidating other credit into a single payment, often at a savings. Payday loans, a different type of personal loan, should be avoided at all costs due to the ludicrous amount of interest they accrue.

Lines of Credit

Many banks will offer a line of credit.  Some of these work almost as a combination between an unsecured loan and a checking account, where you receive convenience checks and use these to purchase items.  These are also often utilized by banks as a method of overdraft protection, meaning that if you overdraw your checking account the overdraft is automatically charged to your line of credit. This provides a safety net if you are one to not closely balance your account on a regular basis.

These are the major categories of credit that are available to the average consumer.  Within each of these categories there are many different offerings, and it pays to shop around. In particular, pay attention to fees and interest rates when looking for new credit. A small amount of time in the beginning can correspond to a large amount of savings over the long run.