First, you may find this post from a couple weeks ago of interest for your question. In particular, there is the following paragraph:

The problem with using "myth" to describe a people's stories about "deities or semi-divine heroes and take place in sort of protohistorical times" is that it is too easily applied to "other people's religion" and as such, it is often used for non-white belief systems in a way that can be cruel if not racist. I once taught a class with Native American and other students. One of the others kept referring to "Indian myths"; one of my Native American students was getting an advanced degree in anthropology, and I knew she would be able to address it from her point of view, so I asked her how she felt about the term "myth" applied to her culture's belief system. She explained that it was hurtful, because there was an element of ridicule to it and her grandparents were still active believers in that world view. We can, for example, quickly see the difference if we mention the Resurrection story (no problem) versus the Resurrection myth (clearly a problem for people of faith).

When teaching his final course in folklore (in 1978), my mentor, Sven S. Liljeblad (1899-2000) asserted the following: "Is there folklore in the Old Testament? Yes. Is there folklore in the New Testament? No."

To which my Old English/Old Norse instructor who was sitting in on the course and sitting next to me, leaned over and said, "Sven must be afraid that there are no lightning rods on this building." Of course, there is folklore embedded in nearly everything, but Sven's point was that many of the stories in the Old Testament seem lifted directly from an oral tradition that was the exact counterpart of the mythology of the Greeks and Romans. So you are correct in questioning the application of the term "mythology." We veer away from its use out of deference for living believers.

At the same time, what Sven asserted about the New Testament could be applied to more recent religious writings of other people - namely, that folk belief and tradition finds itself in many documents, but that doesn't mean that the entire story was itself a legend (a story generally told to be believed) in the same sense of, say the story of The Great Flood. The Flood story is not of the same "historical" class of document as the Gospels: even though the veracity of the Gospels have been challenged by many, the historical setting that they describe is without dispute and is distinct from the fantastic setting of the Flood story. The same could be said of the religious text of Islam, although I am not in a position to discuss that in detail: that is, the story of Mohammed must be regarded as unfolding in a clear historical setting.

edited for a few changes.