If the person you are going out with isn't right for you, then tell them.
Don't "know about it for a while and finally say something".
Be honest. Be truthful. Be straightforward.
When you are going out with someone, the longer it goes on, the longer one side has to grow feelings of "like" or "disdain" for the other.
So you shouldn't drag things out if you've made a decision. It just isn't fair to all involved.