I agree that reductions in credit limits and cancellations of credit lines have an iatrogenic impact on borrower credit scores, reflecting decreases in lender risk tolerance. However, in an economic downturn there is an increase in the probability that a borrower will not pay their account as per the agreement even if there is no underlying change in the borrower's creditworthiness. So when a lender makes changes in its exposure to risk, it effectively is changing the interpretation of a credit score. This then results in an indirect adjustment to the credit scores to rebalance the mapping from score to interpretation.

Credit scores are also relative. When lenders are liquidity constrained, they focus their liquidity on the borrowers who are least likely to default. If the shift in credit underwriting practice leads to a downward shifting of borrower credit scores, that will not affect the set of borrowers to whom they will extend credit.

It's a bit of a chicken and egg problem. The reduced willingness to lend leads to reductions in credit scores which in turn leads to reduced willingness to lend. Similarly, lenders reducing limits causes consumers to fear that such reductions will happen to them, so some consumers tap into their remaining line of credit to preserve it against such a future reduction. The concern about increasing exposure then causes the creditors to implement more reductions. It's a vicious cycle.

In most cases the credit line reductions are being applied to borrowers who carry a balance on their credit cards and not to borrowers who pay off the balance in full each month. The lenders also look at the balance trajectory. If your balance from one month to the next is steadily increasing that can be a sign of financial difficulty, meaning that the risk of default (and the potential cost of that default) is growing.