This is how I think about these:
Credit options (aka binary options)
Related to price of the underlying. Can be a call (bet price is going up) or put (bet price is going down). Price action itself does not trigger a payoff, has to violate one of the terms in the contract that would define a credit event.
Credit spread options:
Related to credit spread of the option. Can be a call (bet spread is widening) or a put (be spread is tightening). Credit spread movement is itself considered a credit event, so no need to evaluate as seperate factor
Credit forwards:
Related to credit spread of option. Valued like a usual forward, but as opposed to just a spread or reference rate, specifically refers to the credit spread
Credit swaps:
allows for credit risk transfers. CDS is most common; can:
Buy CDS:
Why? own the bond and want to hedge risk, or shorting the bond synthetically;
Transaction: pay upfront for protection as well as periodic CDS payments; pay out if credit default event occurs. (defined in contract terms - there is some flexibility in terms of what defines “default”). can also sell if the CDS spread blows out (for example, you buy GE CDS at 45 and it blows out to 200 - you can now either hold the position and see if spreads go up, or if there is a credit event; or you can sell the position for a gain).
Sell CDS:
Why? earn upfront payment and periodic payments from the Long CDS
Transaction: Sell CDS contract, receive upfront and periodic premia; forced to deliver predetermined value in case of credit event (again, what defines a credit event? will be in the contract).
I hope this was helpful, it was as much helping clarify as helping me remember all of this