Legal Question in Credit and Debt Law in California

Re: Secondary Credit Number

Not legal.

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Re: Secondary Credit Number

The reason the law allows people to form corporations or other entities under a tax ID number different from their social security number is to segregate liability which will result in segregating credit. So it is very possible for a person with good credit to be the sole share-owner of a corporation with bad credit, or for a corporation with good credit to be completely owned by a person with bad credit. This practice is quite legal, even authorized by law.

However, most lending institions are savvy to this and will usually ask someone seeking a loan to specify whether they are the majority shareholders in any corporations or owners in any other entities. If the corporation is seeking a loan, lenders will often require a credit check of the majority shareholder's shares. A similar situation arises with trusts and partnerships.