Here are five strategies on how you can obtain credit.

Personal loan 

A personal loan, which is arranged through a bank or financial institution, is the most common credit option available primarily to people with a good credit history. The terms and interest rates vary depending on your history and what type of loan. Loans are unsecured so you don’t need to worry about losing your home because you can’t pay back an instalment.

Credit cards

Credit cards are good for a short-term cash advance. If you have a credit card you can buy what you need at that given time and pay back the money you have used in instalments. Interest is charged on the loan and the terms depend on the credit card issuer. You will normally have a credit limit and a certain period of time when credit is interest free, after which, the interest rate will be set by the lender.

Bank overdraft

This is a form of emergency funding from the bank where you already have an account. An emergency overdraft allows you to go over the limit of money that you own so you can improve your cash flow and meet unexpected expenses.

Payday loan

This is a short term personal loan which you are usually expected to pay back with your next pay cheque. This type of loan could be of use in emergencies, however, it’s not recommended due to the high interest rates.

Pawn shop loan

You can get this loan from a specialist shop where you take an item of value for money. If you fail to pay back the loan, they sell the item to recoup the costs.

For tips and advice on various loans and how to be smart with your money, visit Hippo.co.za, like them on Facebook or follow them on Twitter.