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Investopedia explains 'Credit Cycle'
Credit availability is determined by risk. The lower the risk to lenders, the more they are willing to lend. During high access to credit in the credit cycle, risk is reduced because investments - such as real estate and businesses - are usually increasing in value. Individuals are also more willing to take out loans because interest rates are lower.
After the peak, the assets and investments usually begin to decrease in value, or they do not return as much income, making it harder to pay back loans. Banks then tighten lending requirements and raise interest rates. This is due to the higher risk of borrower default. Ultimately, this cuts down the available credit pool which brings the credit cycle to the low access point.
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