From the Old to the New Testament: From Fact to Fiction?

I once had dinner with Sony Bono.  I did not write about this dinner contemporaneously and am only now talking about it more than forty years after this occurred.  So, I might have some of the details wrong.  The Bible is also not a contemporaneous document.  There were also some reasons for the authors to twist or exaggerate parts of the story - they were telling us about faith, not about the literal details of ancient history.  So what do we make of this?  How does this impact our understanding of the Bible and our belief in God?