Using Get-Help we can see the -Credential parameter expects a PSCredential Object. It sounds like you are not providing that as an argument for -Credential, but rather a string with a user name?
Get-Help New-PSSession -Parameter credential
Specifies a user account that has permission to perform this action. The default is the current user.
Type a user name, such as User01, Domain01\User01, or User@Domain.com, or enter a PSCredential object, such as one returned by the Get-Credential cmdlet.
When you type a user name, this cmdlet prompts you for a password.
Default value None
Accept pipeline input? True (ByPropertyName)
Accept wildcard characters? false
You would want to use Get-Credential to build a PSCredential Object.
$cred = Get-Credential
New-PSSession -ComputerName HostName -Credential $cred