Cannot edit custom folder names for reports
If you create a report and put it in a new folder, there is no way to rename that folder later.
Workaround: If there is a single report in that folder, click edit for the report and change the folder name. If there are multiple reports in the same folder, repeat this for each report until they have all moved to the new folder. Once they have all been moved, the old folder will disappear from the list.