In Veeam, when backing up linux-based VMs with application-aware processing turned on, testing the credentials may fail even though they have been entered correctly.
First, check whether you are really using linux-credentials and not Windows credentials, this can often be overlooked very quickly.
Check whether you see the logon attempt in linux. Depending on the distro, it is logged in a file in /var/log. E.g. for Debian/Ubuntu, it's logged in /var/log/auth.log. Looking at the logging will reveal whether it is a password or SSH key problem, or something else is going on.
Another possibility is that the required cipher is not allowed. Veeam requires the cipher aes128-cbc to be enabled. Although in more recent servers, this is the default, older servers may not enable this cipher by default.
The test will also fail if mlocate is not installed on your server. Veeam uses mlocate for indexing, and as such, it will fail application-aware processing *and* the test if it's not installed. Use whatever your distro uses to install the packages (e.g. Debian/Ubuntu: apt-get install mlocate).