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In this tutorial, Stephen White explains the correct legal process for denying a tenant applicant. He emphasizes the importance of basing decisions on valid criteria like credit history, criminal records, eviction history, or previous landlord references. If you determine not to rent to an applicant, it is essential to use an adverse action letter, which officially communicates the denial and its reasons. This method is similar to processes used in the credit industry, as seen in stores like Macy's or JC Penney, where associates handle credit-related matters without providing in-depth counseling. The video aims to guide landlords on how to deny applicants properly and legally.