Can I Establish Credit Under My TIN Number?

by Kerry Zias
Individual credit is tied to your Social Security number.

Individual credit is tied to your Social Security number.

For the purposes of identification in tax, financial and legal matters, individuals, organizations and business entities need to have and use some sort of taxpayer identification number, or TIN. The basic and most well known type of TIN is the Social Security number, which is assigned to individuals by the Social Security Administration. All other types of TINs are issued by the Internal Revenue Service.

Types of TINs

In addition to Social Security numbers, there are four other types of TINs. Three of them are for very specific types of persons: the individual TIN, the adoption TIN and the preparer TIN. The individual TIN is used by resident and non-resident foreign nationals for the purposes of processing required U.S. tax filings. The adoption TIN is used by adopting parents for the child for tax purposes and the preparer TIN is used to idenitfy a paid tax return preparer. The remaining type of TIN is an employer identification number, or EIN, which can in limited cases be used like a Social Security number.

Employer Identification Number

The EIN is used to identify an organization or a business entity. Examples are nonprofit organizations, estates of deceased people, trusts, corporations and partnerships. If a sole proprietorship employs people, it also needs an EIN. The EIN is not supposed to be used by an individual person for credit or other financial purposes. It can be used this way for a business or organization as its own entity, but not for or by an individual. In addition, in most cases a new business entity will need to submit a personal guarantee with that person's Social Security number to obtain business credit.

Illegal File Segregation

Some people with limited or bad credit histories believe they can obtain credit with an EIN. This belief has been perpetuated by some credit repair services and products. While an established and seasoned business or organization can use an EIN for credit establishment purposes, individuals cannot. Individuals who do this are committing a criminal act of fraud, known as file segregation. The IRS requires the disclosure of the name and Social Security number of the owners and directors of an entity applying for an EIN. Therefore, an individual will have his Social Security number on file and cross-indexed with the IRS in any event.

Other Considerations

While the credit history reporting agencies prefer a Social Security number, they will compile a credit history file without one, provided there is other significant identifying information. These agencies will not allow the use of any type of TIN other than a Social Security number for individual credit files. The IRS has stated that it will be on the lookout for and help criminally prosecute wrongful use of EINs, both at the application stage and in actual financial and tax usage.

About the Author

Kerry Zias has been a strategic business consultant and college instructor of business administration courses since 1990. He has taught courses and performed professional consulting work in the areas of marketing, management, business start-ups, entrepreneurship, real estate, sales psychology and performance, business communications, business law and political/governmental relations. Zias holds a Master of Business Administration in marketing from National University.

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