This problem arose when a client was set up to access a soon to be upgraded Windows 7 PC from Windows 10. They had been familiar with setting up RDP connections previously between windows 7 and 8 machines. When the error “Your Credentials did not work” appeared after the first successful connection they made to the remote windows 7 PC I got a call.
Entering the same credentials as prompted – they could reconnect but each time they needed to re-enter the details. The full text of the message was
“Your system administrator does not allow the use of SAVED CREDENTIALS to log on to the remote computer 192.168.1.1 because its identity is not FULLY verified. Please enter new credentials”.
When you check the credentials in control panel this seems incorrect if the setup choice was to save the credentials – there will be an entry in the Windows credentials for the connection with the designation TERMSRV/192.168.1.1 (replace the ip with your machine name or ip of course). The user and domain name will be correct shown too.
The solution is slightly counter intuitive –
Remove the entry under windows credentials and re-enter it under the generic credentials section using the same format TermSRV/……. and user details.
Save those and re-try your connection. Its should connect without any further intervention