diff --git a/.gitignore b/.gitignore
index 62019b2741..edff43a717 100644
--- a/.gitignore
+++ b/.gitignore
@@ -45,7 +45,3 @@ __pycache__
 # TODO: Update this test to be from a temp directory with a hard-coded impl:
 # https://github.com/knative/func/issues/3196
 /pkg/builders/testdata/go-fn-with-private-deps/.s2i
-
-# TODO: update the test which creates this to run in a temp directory:
-# https://github.com/knative/func/issues/3158
-/pkg/creds/auth.json
diff --git a/pkg/creds/credentials_test.go b/pkg/creds/credentials_test.go
index 2e8a88099a..68e5b549d7 100644
--- a/pkg/creds/credentials_test.go
+++ b/pkg/creds/credentials_test.go
@@ -1024,12 +1024,13 @@ func testHomeEnvName() string {
 func testConfigPath(t *testing.T) string {
 	t.Helper()
 	home := os.Getenv(testHomeEnvName())
-	var configPath string
-	if home != "" { // if HOME is not set, don't create config dir
-		configPath = filepath.Join(home, ".config", "func")
-		if err := os.MkdirAll(configPath, os.ModePerm); err != nil {
-			t.Fatal(err)
-		}
+	//  using a temp directory to avoid polluting the source tree with auth.json
+	if home == "" {
+		home = t.TempDir()
+	}
+	configPath := filepath.Join(home, ".config", "func")
+	if err := os.MkdirAll(configPath, os.ModePerm); err != nil {
+		t.Fatal(err)
 	}
 	return configPath
 }
@@ -1039,6 +1040,9 @@ func testConfigPath(t *testing.T) string {
 func testConfigPathError(t *testing.T) (string, error) {
 	t.Helper()
 	home := os.Getenv(testHomeEnvName())
+	if home == "" {
+		home = t.TempDir()
+	}
 	configPath := filepath.Join(home, ".config", "func")
 	return configPath, os.MkdirAll(configPath, os.ModePerm)
 }