I can't see customer credit as a payment type
This is most likely due to trying to refund a 'Quick Sale', to which customers on your database are never assigned. To get around this firstly assign a customer to the sale and then refund the sale. View the following knowledgebase article:
Note: The problem could also be due to the user's (staff member's) permissions. Go to 'Utilities'/'Manage Users' then select 'Edit Permissions' next to the user's name and make sure they have a tick next to 'Sales'/'Using Customer Credit' and 'Customers'/'Customer Credit Management'. This allows the user to increase/decrease a customer's credit and use customer credit as a payment type.
To find out more information about setting up user permissions visit the utilities knowledgebase section here: 08. Utilities // Below the Water