What is credential management?

Digital credentials are the information used to prove an entity’s identity during authentication. They can take many forms. Passwords are the most familiar user credential, while common machine credentials include digital certificates, tokens and API keys.

Credential management governs these credentials throughout their lifecycle, from creation and secure storage to rotation and revocation. This work is generally handled by a combination of tools—such as secrets and password managers—that centralize credential management rather than leaving each application to manage its own.

Credential management has become a core component of enterprise cybersecurity because the sheer number of active digital credentials in the average IT environment has ballooned with the rise of nonhuman identities (NHIs).

Stolen credentials are now one of the most common causes of data breaches, according to the IBM Cost of a Data Breach report. And when malicious actors get their hands on a valid login, they can sneak right past preventive controls. To the system, they look just like a legitimate user.

Credential management is a part of the broader practice of identity and access management (IAM). It also overlaps with secrets management, which focuses specifically on nonhuman credentials—keys, tokens and certificates—whereas credential management covers credentials of all kinds.

Digital credentials fall into one of two broad groups—user credentials and machine credentials—depending on whether they authenticate a person or a machine.

User credentials authenticate human users. They include:

• Passwords: A password is a secret string of characters that a user enters to prove their identity. It’s the most common credential and, because people often reuse and share them, one of the most frequently compromised.

• Passkeys: Built on the FIDO2 standard for phishing-resistant passwordless authentication, passkeys use public key cryptography to replace shared secrets with a cryptographic key pair.
  
  
• One-time passwords (OTPs): An OTP is a temporary code, valid for a single login or a few minutes, delivered by text message, email or an authenticator app. Because it expires almost immediately, a stolen OTP is worth little to an attacker.
  
  
• Authenticator apps: These apps generate OTPs directly on a user’s phone. The code never crosses a network, so it can’t be intercepted the way a texted code can.
  
  
• Security keys and smart cards: Physical devices that hold a cryptographic credential. A security key plugs into a USB port or taps against a phone, while a smart card carries the credential on an embedded chip. The secret never leaves the device, so there’s nothing for an attacker to phish.

• Biometrics: Biometrics rely on physical traits—fingerprints, face scans, iris scans—to authentic users.

Machine credentials authenticate nonhuman identities—applications, services, workloads and devices—to one another. These systems constantly connect, exchange data and perform tasks on their own, with no human guiding them. Therefore, each needs its own credential to prove its identity.

Common machine credentials include:

• Digital certificates: A digital certificate is an electronic document signed by a trusted certificate authority that binds an identity to a cryptographic key. It lets two systems verify each other before they exchange data.
  
  
• API keys: An API key is a unique string that identifies and authenticates an application calling an API. It tells the receiving service which app is making the request and, often, what it’s allowed to access.
  
  
• SSH keys: An SSH key is a cryptographic key pair that authenticates a user or system to a remote server over an encrypted connection without a password. The private key stays on the client, while the server holds the matching public key. SSH keys are most common as machine credentials but can also be used as human credentials. Automated services use them to reach servers with no humans involved, while developers and administrators use them to log in to the machines they manage.

• Tokens: A token is a piece of digital information issued by a system and used for authentication or authorization. Many tokens are short-lived and allow a system to prove that authentication or authorization has already occurred without repeatedly sharing a long-lived credential that hackers can target.

Credential management matters because stolen and mismanaged credentials are among the easiest and most damaging ways for threat actors to break into an organization. And the number of credentials an enterprise must protect is growing faster than most security teams can track.

According to the IBM X-Force Threat Intelligence Index, 32% of the incidents X-Force responded to last year involved the abuse of valid accounts.

In these identity-based attacks, attackers steal the credentials of human users or nonhuman identities to authenticate as them—a process known as credential theft.

Common forms and causes of credential theft include:

• Using infostealer malware to harvest passwords, session cookies and tokens from infected machines. Attackers can then use the credentials themselves or sell them for money. For example, IBM X-Force found more than 300,000 sets of ChatGPT credentials advertised on the dark web in 2025.
  
  
• Exposing credentials through credential sharing, meaning the same secret is reused between people or systems. Credential sharing can include one person using the same password across many sites or a team passing around a shared admin login.
  
  
• Capturing credentials through other types of cyberattacks, such as brute-force attacks or phishing emails that trick users into entering their passwords into fraudulent fields.

Breaches associated with credential theft are among the costliest and hardest to detect. The Cost of a Data Breach report found breaches involving stolen or compromised credentials cost an average of USD 5.07 million, more than the overall average of USD 4.99 million.

Critically, credential theft is no longer just a human problem. In modern enterprises, the ratio of NHIs to people is estimated to be anywhere from 45:1 to 92:1. Each of these NHIs is a potential vulnerability. NHIs tend to run with fewer security controls and less monitoring than human accounts—making them juicy targets for hackers.

As Nick Bradley, a threat intelligence manager at IBM X-Force, put it on an episode of the IBM Security Intelligence podcast, an attacker who compromises a service account is “stealing something that no one was even watching in the first place.”

Credential management helps close these security gaps by governing every credential across its entire lifecycle:

• Vaulting credentials rather than hardcoding them into apps makes them harder to steal.

• Regularly rotating credentials, such as by issuing short-lived certificates that expire in hours instead of static keys that sit unchanged for years, makes stolen credentials much less useful.

• Monitoring credential activity helps surface misuse and abuse surface quickly—for example, flagging a service account that suddenly authenticates from a new device or server.

Credential management tools and practices can also help organizations meet certain regulatory compliance obligations related to access control and authentication. The General Data Protection Regulation (GDPR), for example, requires organizations to maintain the confidentiality of the systems that process personal data and to ensure that anyone acting under their authority accesses that data only on instruction. Both requirements come down to controlling who holds working credentials and revoking them promptly when they’re no longer needed.

The Health Insurance Portability and Accountability Act (HIPAA) is more specific, requiring access control and unique user identification for electronic protected health information. Every person with access needs their own ID, so every action can be traced to an individual. In practice, this requirement helps rule out shared credentials (and their associated risks) entirely.

Credential management tools and processes govern each enterprise credential across its full lifecycle: issuing it, storing it securely, verifying it every time it’s used, monitoring that use, rotating it on a schedule and revoking it the moment it’s no longer needed or trusted.

A credential gets created and bound to a verified identity, such as a new employee or a newly deployed service. Many different tools can be used to issue credentials, depending on who needs them and for what: identity providers, certificate authorities, secrets managers.

Credential management tools can securely store credentials in several ways. For example, secrets managers and password managers often keep credentials in protected vaults. Only authorized users and NHIs can check out the credentials when they’re needed, and the vault logs every such request.

Some credentials, such as passkeys, stay on the user’s own device. Because they’re never transmitted to a service, attackers cannot intercept them.

Each time a credential is used, the system verifies it before granting access, confirming that the authenticating identity is who or what it claims to be.

In some systems, such as logging in to a web app, the credential needs to be presented only once. After a successful login, the app issues the user a short-lived token that stands in for the original credentials.

In other systems, the credential must accompany every request. For example, APIs often present their API keys with every call. In these systems, credentials are often encrypted or otherwise protected to prevent theft in transit.

Credential use is tracked continuously, creating an audit trail of who used the credential, who checked it out of a vault, what they did with the access and more. This real-time monitoring can help surface misuse faster. A service account that suddenly authenticates from an unfamiliar country at 3 AM stands out against months of routine use. Privileged credentials usually get the closest scrutiny because they can cause the most damage when compromised.

Credential management tools regularly retire credentials and replace them with new ones. The specific cadence at which credentials are rotated depends on several factors, from industry standards and regulatory requirements to enterprise policies. Regular rotation helps mitigate the risk of a breach. Stolen credentials stop working before an attacker can get much use out of them.

The moment a credential is lost, stolen or no longer needed, the system revokes it, shutting off an orphaned credential before it can become a standing vulnerability. Dormant accounts that never get retired—for example, an employee leaves the company but their credentials are never revoked—are a common vulnerability. Because nobody is legitimately using the account, nobody notices when an attacker takes control of it.

Credential management isn’t implemented through a single platform. Rather, organizations typically use a mix of specialized tools, each securing a different kind of credential. Some tools bundle several of those functions together.

Notably, there is something called a credential management system (CMS), but it is usually much narrower in scope and focused mostly on smart cards and public key infrastructure. A CMS is the platform that issues smart cards and certificates and manages them across their lifecycle. In other words, it’s one tool in the mix, not a single system that governs every credential.

Other key categories of credential management tools include:

Password managers help secure human users’ credentials. They generate and store strong, unique passwords for each of a user’s accounts. Password managers help mitigate the risk of breaches, as a credential stolen from one account cannot be reused on the others.

The manager keeps these passwords in an encrypted vault that unlocks only with a master password, passkey or biometric scan. In many dedicated password managers, the vault is encrypted and decrypted on the user’s own device. The service provider never holds the credentials. Even if the password manager’s central system is breached, attackers can’t see users’ passwords. 

Secrets managers secure nonhuman and machine credentials, often by keeping them in a central, encrypted vault. Without a secrets manager, nonhuman credentials can end up scattered across the enterprise network, embedded in source code and config files. Malicious actors can easily steal these credentials.

With a secrets manager, these credentials are held in secure central vaults instead. Only authorized entities with the proper permissions can check the credentials out of the vault.

Some vaults hand the credential to the requester, such as autofilling a password in a browser field. Other vaults bypass the requester entirely, injecting credentials directly into the relevant service.

Regardless of how the credential is shared, the vault records who took it and when. Many secrets management tools rotate credentials when a session ends so that NHIs can’t simply reuse them.

Privileged access management (PAM) protects the credentials of privileged accounts—the administrator and service accounts that have access to the most sensitive systems. Because those credentials can do the most damage if stolen, PAM tools layer extra controls around them, including vaulting, session recording and just-in-time access.

Session recording entails recording the entire session during which a user uses a privileged credential. Just-in-time access is a model in which users are not granted access permissions until the moment they need them, and those permissions are valid for a limited time.

A public key infrastructure (PKI) issues and validates the digital certificates that let two systems verify each other before they exchange data. Certificate lifecycle management tracks those certificates across their lifespans, so none expires unnoticed, and any that are compromised can be revoked and replaced quickly.

A PKI’s most sensitive credential is the certificate authority’s own signing key. Anyone who steals it can mint certificates that other systems will trust. Certificate authorities frequently keep their signing keys in a piece of tamper-resistant hardware called a hardware security module (HSM). Certificates are signed internally on the HSM, so the key never leaves the device.

An identity provider (IdP) is a service or system that verifies who a user or machine is at the moment of authentication. The IdP then vouches for that identity to other applications. Rather than making each application store and manage its own credentials, an IdP centralizes identity management and authentication.

Common IdP capabilities include:

• Single sign-on (SSO): SSO lets users log in to multiple systems with a single identity, instead of using separate logins for each. For instance, signing in to a company portal once can allow a user to access email, chat and HR tools without passing more authentication challenges.

• Multifactor authentication (MFA): Many IdPs can implement MFA, where users must provide multiple authentication methods to verify their identity. MFA can make it harder for attackers to break into a system because they need to steal more than one authentication factor to take over an account.

• Passwordless authentication: Passwordless authentication methods, such as passkeys, replace passwords with authentication factors that are harder—or outright impossible—to steal.

• Role-based access control (RBAC): RBAC grants users permissions based on their job roles, limiting what they—and threat actors armed with compromised credentials—can reach. Authorization is a separate step from authentication, but the IdP is where both begin. It stores each identity’s role assignments and passes them along in the tokens it issues. A connected application learns not just who the user is but what they’re entitled to do.

IdPs also make it easier to revoke credentials when they’re no longer needed. For instance, when an employee leaves, disabling their identity at the IdP level cuts off every connected application at once. There’s no need to hunt down a separate account in each system.