Compulsive Lying - Pseudologia Fantastica
The defining characteristics of pseudologia fantastica are that, first, the stories are not entirely improbable and often have some element of truth. They aren't a manifestation of delusion or some more wider form of psychosis: upon confrontation, the person can acknowledge them to be untrue, even if unwillingly.
Second, the fabricative tendency is long lasting; it is not provoked by the immediate situation or social pressure as much as it originates with the person's innate urge to act in accordance.
Third, a definitely internal, not an external, motive for the behavior can be clinically discerned. E.g. long lasting extortion or habitual spousal battery might cause a person to lie repeatedly, without the lying being a pathological symptom.
Fourth, the stories told tend towards presenting the person in question in a good light. For example, the person might be presented as being fantastically brave, knowing or being related to many famous people