The password itself is not stored in AD in decryptable form. As I understand it what is stored is a hash of the password and the date/time when the password was set. When a user logging on enters the password that value and the date/time when the password was last set are used to re-calculate the stored hash. if this is the same as the stored hash, the assumption is that the user entered a valid password.
Full Definition of CREDENTIAL. 1. : something that gives a title to credit or confidence; also: qualification 3a. 2. plural: testimonials or certified documents showing that a person is entitled to credit or has a right to exercise official power.
In other states it might be called a license or a certification. A credential is the permit your state issues after it confirms that you've met the necessary requirements. A credential is only issued to individuals who have met all the state's requirements.