Say that in a Jenkins configuration the list of available credential types is "A", "B" and "C".

Create a job with a credential input parameter FOO_CRED and limit the possible types to type, say "B".

Go to Build with Parameters on the job and click the Add button to create a new credential to be used in FOO_CRED.

You will see that all the credential types are listed ("A", "B" and "C"), rather than just the ones that the present input parameter is limited to.

Ideally, only the types the present input parameter is limited to should be in the dropdown —in this case only "A" should be visible.