Most scholars do not simply regard any ancient text as either historical, ahistorical, fiction, etc. A large part of this is because ancient historians and ancient authors in general did not have the modernist and elitist view of history that it must be "objective" and "naturalist." Modern historians function, usually, under methodological naturalism, which is not to say that there are no supernatural events, but that we have no tools, logical or otherwise, by which we can truly evaluate them. Thus, even most Christian academics function under this.

When historians evaluate the Bible, it is not simply a matter of saying X did not happen because there is a miraculous or legendary depiction of it. A classic example of this is the Burning of Worms. This was a historical event that took place in the Burgundian kingdom in the 5th century, when the Roman "allies", the Huns, sacked and burned the city. This is recorded in extremely legendary fashion in the Nibelungenlied, a Germanic legend. In the Nibelungenlied, all sorts of completely legendary things happen there, none of which are historical, but they still regard many of the historical persons involved and a historical event.

The Bible has a lot of these similar functions, but of course may also have outright fiction mixed in. The Book of Job, for instance, is likely a fictional theological treatise, not about any kind of historical events but trying to discuss a specific issue regarding the nature of good and evil in the world, and how they affect good people (see Choon Leong Seow's commentary Job 1-21, Eerdmans, 2013). However, when you look at the Books of Kings, these tend to actually have quite a few verifiable historical events. For instance, the war with the Moabites as recorded 2 Kings 3:4–28 we know is a historical event, and we know this because we even have a Moabite side of the story, the Mesha Stele. Both of these have legendary elements, both have the deities of Chemosh and Yahweh play roles in the historical events, but we know that these events most likely happened, we have multiple attestation. Likewise, we have several archaeological finds which attest to the "House of David" being historical, and leading scholars such as Israel Finkelstein consider him to have been a real person. But, the Biblical account is likely all legendary and any historical items there we probably cannot recover through all of this legend. In this way, David has a bit of a King Arthur situation, though David has actually better attestation overall.

In regards to the New Testament, things are actually very difficult, because first century Palestine is notoriously lacking in documentation and sources. Josephus is the only surviving historian of the region and time-period, and whether he mentions Jesus and James, in particular, has become quite a hot button issue (Ken Olson, N. P. L. Allen, Tessa Rajak, Joshua Efron, etc. have all expressed doubts on all the passages mentioning Jesus, and the number doubting any passages are authentic continues to grow; those doubting the Testinominium Flavianum in Antiquities book 18, have become so notable that most scholars consider it a very respectable position to doubt this passage ever existed originally). Additionally, the earliest Christian writers are not particularly always helpful. Paul records very little of the biography of Jesus (but contrary to those who say Jesus did not exist, Paul confirms he likely did). In general, what he provides historically does not verify the Gospel accounts much at all, and there are times where many scholars have argued him to contradict them. Likewise, the Gospels have been variously debated. There are roughly three camps of scholars (who are respected) in New Testament scholarship, when it comes to the Gospels: the conservatives (who are largely a Christian base, arguing for accuracy of the Gospels, and they are a shrinking group), the Moderates (who argue there is history and it can be recovered with existing methods from the Gospels), and the New Testament minimalists, like myself (who argue that our methods are inadequate for recovering any detailed historical picture of early Christianity from the New Testament, and especially the Gospels). This tends to reflect the state of Old Testament studies, except at this point Old Testament minimalism has affectively won out, but this should not be confused with Copenhagen Minimalism, which is a pretty small group still. For example, William Dever and Israel Finkelstein have both been described as "minimalists" (Dever has been described as a maximalist and a minimalist, in fact), but both of them are opposed to the Copenhagen minimalists like Thomas L. Thompson and Niels P. Lemche.

So, it is basically used like most ancient sources, depending on the scholars involved. Christian scholars treat it... like scripture. But those on the moderate and minimalist sides tend to treat it like they would say Livy: as something needing to be carefully evaluated, and scrutinized, and often reliable or unreliable, by the standards of methodological naturalism.