When using credentials in Powershell, you usually use Get-Credential, which essentially creates PSCredential objects. Creating such an object prompts the user to enter a username and password, which is not really usable in unattended scripts. There's a method where you can specify an unencrypted password but this is not secure. Fortunately, there's also a method where you can store the encrypted password in a file and use it to set the password.
Note that the password is stored in the file using a computer-based encryption key. This means that the file would only work on the computer it was generated on. Trying to use it elsewhere would invalidate the password file.