Is my friend idea on building credit wrong?

He thinks that you should pay it in full every month to build credit.

For example, let's say you have $800 in cash to buy an iPhone but you put it on your credit. He thinks that you should pay it all back As soon as possible, like the same day.

What I told him is that the banks like it when you pay it not in full ($800) but rather monthly with some interest in it. So that it increases your CC score. If it's two months or three months, etc.

Obviously if you miss payments that's a no no.

Added (1). So if I put $50 of gas on my card, I should run to the bank before it closes and pay for it? How will I build credit if I can't show the bank that I can pay for monthly payments on time. So what you're saying is that I should have 1 dollar of debt and pay for it every month? How would they trust me I play with the "low" numbers. What is a low balance?

Added (2). @StephenWeinstein Also btw my friend never said anything about a LOW BALANCE, he says pay it in full meaning no balance at all.

You are both wrong.

You do not need to pay interest to accrue a solid credit score. You need to pay the bill on time each month. If you pay it off each month that does not increase your credit score any more or less, than if you pay a portion. But what it does, is it avoids paying interest to the bank.
- Using more than 30% of your credit without paying it back each month does impact your credit. Example: if your credit card limit is $1000, you should never keep more than $300 as the card balance from month to month.

Your friend on the other hand wants to pay off the card immediately. This doesn't help your credit because it doesn't look like you have a balance. Instead you should pay the bill monthly, AFTER the statement is generated.
Example: The billing cycle goes from the 20th of the previous month to the 19th of this month. The bill is due on the 30th, you should pay the bill between the 20th-25th to make sure it is received by the bank by the 30th.
- if you pay it late, you will incur a late charge, but it typically has to be more than 30 days late to have it impact your credit score.

Your friend is right. You friend is not wrong. You are wrong.

It does not mater what the banks "like". Making them happy is not what increases your score. What increases your score is keeping a low (or zero) balance and going over a year between applications.

Things that the banks like, such as applying for more cards, decrease your score.