No credit use is worse than abusing it! Seems mad but that’s the way they manage risk, high risk is better than unknown.
So my question is – would it be best from a credit rating perspective, to cancel these cards, or just throw them in a draw or cut them up?
Standard advice is to never go above 1/3rd of your credit limit on a card for more than a month and regularly pay the balance off, this shows you have good debt management. Maxing out is not good either but the occasional big purchase with a few hundred spare (to allow for interest) is fine as long as it’s paid off quickly. Having two unused cards will hurt your application for more though as they will see that you have access to credit in addition to what you’re applying for. Credit rating should be unaffected but they’re only a guide anyway, lenders use much more precise analysis to decide to approve you or not. For example you could have two cards with no balance but £10k available between them. You apply for a £6k loan which is comfortably affordable but the lender sees that you could, in theory, get the £6k loan but then immediately run up another £10k on the cards, pushing you above their risk limit. So even though your credit history may be very good the risk is not favourable. If you have a good credit rating and are generally sensible then getting more credit if you need to shouldn’t be hard so I’d definitely get rid of the unused cards and use the remaining one sensibly.