The 35-year-old defender has been out of action with hip and and thigh problems since the 1-1 draw with West Ham in mid-October. Craddock had hoped to be back on the training ground in the near future, but further scans revealed the injury has not yet healed.
"Jody's going to be out for quite a while - it could be six to eight weeks," McCarthy told www.wolves.co.uk.
"It's still his hip and thigh - it's been bothering him. He had it scanned again and there's a tear in it.
"He's got to have some treatment on it but it's far worse than we thought. He won't be fit until after Christmas."
There was some better news for McCarthy, though, with Karl Henry's medial ligament injury recovering quicker than expected.
The midfielder had been set to miss two months after taking a blow to the knee during the meeting with Blackpool 10 days ago.
But the injury was not as bad as first feared, with Henry now expected to return in around four weeks.
Source: PA
Source: PA