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I want to migrate SQL Server credentials used for proxy accounts from SQL Server 2005 to 2008 R2. Is there a way to decrypt credential passwords or a script to copy credential with the same password on new instance. Unfortunately I don't have the passwords for the accounts used for SQL credentials. So looking for a workaround.

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I'd suggest you take a look at the Copy-DbaCredential Powershell cmdlet from dbatools.

From their web page on this cmdlet:

By using password decryption techniques provided by Antti Rantasaari (NetSPI, 2014), this script migrates SQL Server Credentials from one server to another, while maintaining login names and passwords.

Here is an example of how you'd invoke this cmdlet

Copy-DbaCredential -Source sqlserver2014a -Destination sqlcluster

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