Passwords can be used to secure individual files, directories, or even entire storage devices.

Usernames and Passwords can be used to confirm the identity of users. Once verified, the system assigns permissions based on their username - typically create, read, write and delete access to particular directories and software applications assigned to the User.

If these files are accessed over a network, then these permissions are set by the Network Administrator.

Data secured by passwords is only secure whilst the passwords remain secret.  Bad practices have exposed these passwords - writing them down in the clear or stored in a open unsecured text file.  Passwords must be protected and it is recommended to regularly change the passwords. Some systems will enforce regular changes and also rules for password creation - minimum sizes, repetition of same password, char/number combinations, etc.