diff --git a/packages/node_modules/@node-red/runtime/lib/storage/localfilesystem/projects/index.js b/packages/node_modules/@node-red/runtime/lib/storage/localfilesystem/projects/index.js
index ca87d76e9..b19889bcb 100644
--- a/packages/node_modules/@node-red/runtime/lib/storage/localfilesystem/projects/index.js
+++ b/packages/node_modules/@node-red/runtime/lib/storage/localfilesystem/projects/index.js
@@ -85,7 +85,10 @@ function init(_settings, _runtime) {
     var ffBase = fspath.basename(flowsFullPath,ffExt);
 
     flowsFileBackup = getBackupFilename(flowsFullPath);
-    credentialsFile = fspath.join(settings.userDir,ffBase+"_cred"+ffExt);
+    credentialsFile = fspath.join(settings.userDir,ffBase+"_cred"+ffExt); // if creds file exists in "old" location userdir then use it
+    if (!fs.existsSync(credentialsFile)) { // if not then locate it next to flows file in flows dir
+        credentialsFile = fspath.join(fspath.dirname(flowsFullPath), ffBase+"_cred"+ffExt);
+    }
     credentialsFileBackup = getBackupFilename(credentialsFile)
 
     var setupProjectsPromise;