diff --git a/prowler/CHANGELOG.md b/prowler/CHANGELOG.md
index f0f2f8a57c..f2d5ae8123 100644
--- a/prowler/CHANGELOG.md
+++ b/prowler/CHANGELOG.md
@@ -26,6 +26,7 @@ All notable changes to the **Prowler SDK** are documented in this file.
 - Update CIS 4.0 for M365 provider. [(#7699)](https://github.com/prowler-cloud/prowler/pull/7699)
 - Update and upgrade CIS for all the providers [(#7738)](https://github.com/prowler-cloud/prowler/pull/7738)
 - Cover policies with conditions with SNS endpoint in `sns_topics_not_publicly_accessible`. [(#7750)](https://github.com/prowler-cloud/prowler/pull/7750)
+- Fix `m365_powershell test_credentials` to use sanitized credentials. [(#7761)](https://github.com/prowler-cloud/prowler/pull/7761)
 - Change severity logic for `ec2_securitygroup_allow_ingress_from_internet_to_all_ports` check. [(#7764)](https://github.com/prowler-cloud/prowler/pull/7764)
 
 ---
diff --git a/prowler/providers/m365/lib/powershell/m365_powershell.py b/prowler/providers/m365/lib/powershell/m365_powershell.py
index 9dbda1c01e..e6a296b57c 100644
--- a/prowler/providers/m365/lib/powershell/m365_powershell.py
+++ b/prowler/providers/m365/lib/powershell/m365_powershell.py
@@ -87,10 +87,10 @@ class M365PowerShell(PowerShellSession):
             bool: True if credentials are valid and authentication succeeds, False otherwise.
         """
         self.execute(
-            f'$securePassword = "{credentials.passwd}" | ConvertTo-SecureString'
+            f'$securePassword = "{self.sanitize(credentials.passwd)}" | ConvertTo-SecureString'
         )
         self.execute(
-            f'$credential = New-Object System.Management.Automation.PSCredential("{credentials.user}", $securePassword)\n'
+            f'$credential = New-Object System.Management.Automation.PSCredential("{self.sanitize(credentials.user)}", $securePassword)'
         )
         decrypted_password = self.execute(
             'Write-Output "$($credential.GetNetworkCredential().Password)"'
diff --git a/tests/providers/m365/lib/powershell/m365_powershell_test.py b/tests/providers/m365/lib/powershell/m365_powershell_test.py
index b841602914..7bc3236433 100644
--- a/tests/providers/m365/lib/powershell/m365_powershell_test.py
+++ b/tests/providers/m365/lib/powershell/m365_powershell_test.py
@@ -145,7 +145,7 @@ class Testm365PowerShell:
             f'$securePassword = "{credentials.passwd}" | ConvertTo-SecureString'
         )
         session.execute.assert_any_call(
-            f'$credential = New-Object System.Management.Automation.PSCredential("{credentials.user}", $securePassword)\n'
+            f'$credential = New-Object System.Management.Automation.PSCredential("{session.sanitize(credentials.user)}", $securePassword)'
         )
         session.execute.assert_any_call(
             'Write-Output "$($credential.GetNetworkCredential().Password)"'