Honesty is ALWAYS the best policy. Telling untruths is unfair to both the teller and the listener. When you tell the truth you never have to remember what story to fall back on, there is only one and that's the truth. Telling lies will ruin your reputation to the point no one will ever trust you again.
It is always best to be honest with EVERYONE! They may not like what you have to say but in the end you will both be better off for it.