What Are User Credentials? Functions, Types, and How to Keep Them Secure

User identity is the first line of security defense for every company. No physical firewall can truly withstand threats if its main entry point—user identity—is not tightly locked.

This is where a deep understanding of user credentials becomes critical. For a CTO or IT Manager, managing credentials is not merely about passwords, but a business risk mitigation strategy.

Negligence in managing this aspect can lead to massive financial losses and loss of customer trust. Therefore, it is important for you to understand the anatomy of credentials thoroughly.

What Are Credentials?

Technically, a credential is proof of authentication used to verify the identity of a user or system when attempting to access network resources. In a cybersecurity context, this is the digital “key” that distinguishes legitimate users from intruders.

Many assume that credentials are limited to usernames and passwords. However, this definition has evolved significantly alongside the complexity of cyberattacks.

Credentials encompass all forms of data, guaranteeing someone’s identity claim, ranging from something you know, something you have, to something you are.

Types of Credentials

To build a layered defense system, you must recognize three main credential categories recognized in global security standards.

1. Knowledge Factors

This is the most traditional and commonly used form. Main examples include passwords, passphrases, and Personal Identification Numbers (PINs). Although easy to implement, this type has the biggest weakness because it relies on human memory and is vulnerable to social engineering techniques like phishing.

2. Possession Factors

This factor refers to physical or digital objects that the user must hold. Examples include smart cards, hardware tokens (like YubiKey), or One-Time Password (OTP) codes sent to mobile devices.

3. Inherent Factors

This category uses unique user biometric characteristics. This includes fingerprint scanning, facial recognition, and retinal or voice scanning. This technology is considered the most secure because it is very difficult to forge or steal compared to passwords. However, its implementation requires hardware infrastructure that supports it on the user side.

Read also : IAM Biometric Indonesia with High Security and Privacy Challenges

How Credentials Work in Digital Systems

Understanding credential workflows is the initial step in designing robust security architecture. This process is generally divided into two crucial stages: Identification and Authentication.

1. Identification Process

At this stage, the system only recognizes who is currently trying to enter. Users input a public identity, such as an email address or username. The system then searches for that data in the directory database. If the identity is found, the system will request further proof to validate the claim.

2. Authentication and Verification Process

This is where credentials play a vital role. The system compares the entered credential data (e.g., a password hash) with data stored on the server. If they match, the server issues an “access token” (like a JSON Web Token or session ID). This token is used by the user to interact with the application without needing to log in repeatedly.

This data exchange mechanism must be encrypted using high standards. You can study modern encryption standards via guides from NIST Digital Identity Guidelines to ensure regulatory compliance.

Key Functions of Credentials

Implementing good credential management is not just technical, but a foundation of B2B business operations.

1. Access Control

The most fundamental function is restricting who can enter specific areas within your network. This prevents unauthorized access to sensitive corporate data or personal customer data. With proper access management, you can implement the Least Privilege principle, where users are granted access only according to their work needs.

2. Accountability and Audit Trail

Credentials allow the system to record and link every digital activity to a specific user identity. Every action—from login, file access, data changes, to failed access attempts—is recorded chronologically in an audit trail.

In digital forensic scenarios, you can track who accessed specific files and when it happened. This is incredibly helpful in security incident investigations, internal access abuse detection, or post-attack analysis.

This feature is crucial for companies bound by strict data compliance regulations, such as the banking or healthcare sectors.

3. Non-Repudiation

A strong credential system prevents users from denying actions they have taken within the system. Because valid authentication occurred, the activity is legally bound to the user’s identity.

Risks of Leaked Credentials

Compromised Credentials are a nightmare for every Chief Information Security Officer (CISO). The impact can paralyze business operations within hours.

• Credential Stuffing and Account Takeover (ATO)
  Attackers use username and password lists leaked from other sites to try to automatically enter your system. If successful, Account Takeover occurs. This attack is highly effective due to users’ habit of reusing the same password across platforms. Reports from the OWASP Foundation place this attack as one of the highest web application security risks.
• Reputational and Financial Loss
  For B2B companies, trust is currency. If client data leaks due to poor credential management, a reputation built over years can be destroyed instantly. Additionally, regulatory fines from data protection violations (like UU PDP in Indonesia or GDPR in Europe) can be significant.

How to Keep Credentials Secure

Security is a continuous process, not a final result. Here are technical strategies you can implement immediately.

1. Implement Multi-Factor Authentication (MFA)
   MFA is the current gold standard of security. By mandating two or more verification factors, you mitigate the risk of password breaches by over 99%.
2. Manage Privileged Accounts with Privileged Access Management (PAM)
   Administrator accounts are prime targets (“Crown Jewels”). Do not let admins know their own root passwords permanently. Use PAM solutions to rotate passwords automatically and grant access only when needed (Just-in-Time access).
3. Single Sign-On (SSO)
   Single Sign-On (SSO) reduces Password Fatigue. The more passwords employees must remember, the greater the likelihood they write them on paper or use weak passwords. SSO simplifies this while centralizing security control.
4. Continuous Education (Security Awareness)
   Even the most advanced technology can crumble due to human error. Train employees to recognize phishing, as phishing is the easiest way for attackers to steal credentials (even those protected by the best technology). Read also: Avoid This! 7 User Habits That Weaken Security Systems

Implementing Strong Password Policies

Force users to create complex passwords and perform periodic rotations. However, avoid overly complicated rules that trigger users to write passwords down. You can also start shifting to passwordless technology using FIDO2 standards to eliminate phishing risks on static credentials.

1. Encryption and Hashing

Never store passwords in plain text. Use strong hashing algorithms like Argon2 or bcrypt with unique salts for every user so passwords cannot be reversed to their original form. Besides passwords, other confidential credential data like authentication tokens or API secrets must be protected with secure encryption and key management. With this approach, a database leak does not immediately make user credentials readable or usable.

2. User Education and Phishing Simulation

Security technology, no matter how advanced, will fail if the human factor is ignored. Therefore, companies need to provide regular cybersecurity education so users can recognize credential theft attempts via phishing emails, instant messages, or other social engineering techniques. Beyond theoretical training, phishing simulation helps test user readiness in real conditions. Simulation results can be used to identify behavioral gaps, increase security awareness, and build a culture of vigilance against cyber threats.

3. Use Centralized Access Management (SSO)

Single Sign-On (SSO) allows users to access various systems with one centralized identity. This approach reduces the number of credentials to remember, thereby minimizing password fatigue risks and the use of weak or repeated passwords. From a security and administration side, SSO simplifies user access management, including consistent security policy application and rapid access revocation during incidents or role changes. This helps close security gaps that often arise from scattered account management.

Conclusion

User credentials are assets as valuable as corporate financial data. Understanding credentials merely as access keys is a fatal mistake in this aggressive cyber era.

You need a holistic approach combining advanced authentication technology, strict policies, and continuous education. Negligence in just one aspect can open doors to damaging risks.

Ensure your digital infrastructure is equipped with an identity management system that is not only secure but also provides a seamless user experience. As mandated by global privacy regulations like those in GDPR compliance regulations, data protection is an absolute obligation.

With the support of Adaptist Prime, your company can build a digital ecosystem that is secure, time-efficient, and ready to grow without sacrificing data protection or user convenience.

FAQ

Are OTPs included in the credential category?

Yes, OTP (One-Time Password) falls under the Possession Factors category or something you have, as it is sent to the user’s personal device.

What is the difference between Identification and Authentication?

Identification is the process of recognizing who the user is (e.g., inputting username), whereas authentication is the process of verifying that the user is truly the owner of that identity (e.g., inputting password).

Why are passwords alone not secure enough?

Passwords are easily guessed, stolen via phishing, or breached through brute force attacks. Relying on a single factor creates a Single Point of Failure.

How does Adaptist Prime help secure credentials?

Adaptist Prime provides CIAM infrastructure with advanced encryption features, flexible MFA management, and login anomaly detection to prevent unauthorized access.