Actually, there are three types of corporations: LLC, C-Corporations and S-Corporations.
The LLC and S-Corp are both pass-through tax entities, meaning that the IRS (assuming you're in the States) doesn't recognize you and your business as separate entities. So you are taxed on your personal tax return for all profit the business reports. Likewise, if the business loses money rather than makes it, you can claim the loss on your personal tax return.
The C-Corp is a separate entity tax-wise. Than means the Corporation pay taxes on profit or can write off loss. The only tax you pay is on any salary or dividends you collected from the C-Corp.
All three protect your personal assets in the event of being sued, except in cases of outright fraud or negligence, in which case the legal system can pierce the corporate veil and personally hold the board of directors liable for damages.
Credit-wise, even if you are a C-Corp, chances are good that a lender will require you to be personally liable for any debt incurred, should the company default. Because one way or another, they'll want their money.
The LLC is by far the easiest type to set up and maintain. That's because the requirements over minutes and board meetings to maintain your corporate status are less strict for the LLC.
I also have a SitePoint article on the topic, if that helps.