The correct syntax is
CREATE DATABASE SCOPED CREDENTIAL credential_name
WITH IDENTITY = 'identity_name'
[ , SECRET = 'secret' ]
Before creating a database scoped credential, the database must have a master key to protect the credential. For more information, see CREATE MASTER KEY (Transact-SQL).
When IDENTITY is a Windows user, the secret can be the password. The secret is encrypted using the service master key. If the service master key is regenerated, the secret is re-encrypted using the new service master key.
Regards,
Oury