Craddock, who had a loan spell at Stoke two years ago, has started seven games in the Premier League this season, but is out of contract next summer.
McCarthy admits the 34-year-old could easily have left Molineux in the past, but will not rush into handing Craddock an extension.
"Jody's time at Wolves could have come to an end," said McCarthy. "The likelihood of it was quite high at one stage.
"I can't remember what changed my mind. I called him back and put him in the team.
"He has a one-year deal and there has been no discussion about a new one. It's a bit premature.
"But Jody is far too fit and healthy to be having any swansongs. He's doing himself no harm and playing very well. He goes in where it hurts."
Stoke had been keen to sign Craddock permanently at the end of his loan spell, with Tony Pulis believing the centre-half would have been a valuable addition to his squad.
Pulis recalled: "I just thought he'd do well here. He is a good pro, gets on with his job, and is a really good lad. But, unfortunately, Mick took him back."