Since the risks associated with storing passwords in a file and hard coding the password in scripts far outweigh any potential benefits, using Credential Manager became more of a practice. Even if the file is encrypted, there is still a risk that the encryption could be compromised, allowing attackers to access the passwords. But it is generally not a good idea to store passwords in files.

Storing Credential in a file – In few situations, admins may store password in a file as a plain text to run PowerShell without prompt. Passwords that are hardcoded can easily be exploited by hackers to hijack into high-powered administrator accounts. But it is quite insecure, since PowerShell script stores string variables in plain text. The method does work to run a PowerShell script bypassing the Get-Credential cmdlet.

Hard-coding the password in scripts – One of the common methods is to write the user name and password directly into the PowerShell script as plain text and then create PowerShell credential object to pass. When running PowerShell scripts, credentials need to be saved in order for them to be fed into scripts that are run autonomously. To avoid being prompted for a user name and password in such cases, there are a few ways for it. As a Microsoft 365 admin, it is difficult to keep typing user names and passwords when connecting to multiple tenants, SharePoint sites, or various Office 365 services. There is a common issue that admins face every day when they use PowerShell. PowerShell makes work easier for admin by automating processes that require repetitions thereby reducing the possibility of errors.

Powershell credential manager