Case in point: I worked very closely with a fantastic temp who was assisting me at a Fortune 500 organization. She had all of the qualifications for the full time opening and did an outstanding job while temping. When it was time to offer her the full time role, my client verified her 4 year degree, and she had falsified it on her resume, thanks to bad advice she received from a relative. The offer was rescinded, and I refused to work with her again, because I was unable to trust her. Once you break trust, it is much harder to rebuild than just being transparent.
I would have still sent her to the job knowing she did not have her degree. The organization would have hired her, and even worse, they offer tuition reimbursement, so she would have been able to complete her degree while working. It never got to that point.
Whether a legal issue, credit blip (and after the last few years with the economy, who doesn’t have a problem there), or any other weakness, just be honest and share what you have done or can do to improve. Mom is right on this one!