Jenkins credentials plugin and GIT client not working

I had the same problem. The issue is that the Jenkins Git plugin expects to have git version 1.8 or higher installed on the Jenkins server - but doesn't check that or warn you that you're using an out-of-date release. (git 1.8 supports a --local option to be specified for git config; git 1.7 doesn't.)

There are a number of options available to you to workaround this:

1. Update the version of git installed on your server.
2. Have Jenkins download git upon demand, and use that version for building your projects. (This takes quite a bit of configuration.) This option does not use the copy of git installed on your server.
3. Have Jenkins use JGit (pure Java version of git which does not require git to be installed on your server) - this uses the JGit that comes with the Jenkins Git Client, so far as I can tell.

Options 2 & 3 are available through the Add Git button on the Manage Jenkins/Configure System page in the Git/Git installations section.

My server runs Ubuntu 10.4 LTS, for which there is no git 1.8 package available in the standard repositories, and I prefer not to install non-packaged software on my server, so that ruled out option 1 for me. I found the configuration for option 2 to be too onerous, and didn't give me a warm feeling that it would continue to work for new git releases. So that left me with option 3, which has been working OK for me.