Even if you don't personally know anybody who has been involved in a resent project, you can still ask around. Maybe you noticed someone in your neighborhood having some work done. You can go to talk to them and ask about their experience. A great way to get a person to open up is to complement them on the work and ask about it.
Although you might not know any contractors, you might know a subcontractor or two. You can ask people you know that are in the construction business their opinions. Ask if they can recommend a contractor that would be good for the job that you are going to undertake.

Ask for credentials and references-There is a lot of your money and piece of mind riding on your contractor. You should be vigilant about making sure that this person is legit. You should start with making sure that your contractor is licensed in your state. Don't be afraid to call the state board and make sure that the license if in good standing.
Also, ask the potential contractors for references and call on the references. You need to be sure that other people will vouch for your contractor's integrity and ability before you sink your trust and money into him. Make sure that your contractor has worked on projects similar to yours and with good results. It is a good idea to go and see some of the previous work in person. See if the results are something that you would be satisfied with.

Find out about your potential contractor's workload. It might be possible that a contractor did a great job on your neighbor's house when that was his only job. Now that he is trying to work two jobs and adding yours, his resources might be stretched thin and your project might not get a proper attention.

Get to know potential contractors before hiring one-some people just have better chemistry with you than others do. It is a good idea to meat your potential contractor and get a feeling for whether or not this is someone that you will be able to get along with. Don't be shy about asking questions during the interview process. Ask how they have handles conflicts in the past. You want to make sure that you and your contractor can work together as a team.

See that they complete all paper work and include lists of materials-there is quite a bit of paper work associated with construction loans and building projects. Look over the paper work that is filled out by your contractor. You want to make sure that they fill in all the details. There are some red flags to watch out for. These include a contractor telling you that the paper work isn't important. Also, be very careful of a contractor that wants to give you a blanket price for "materials". If they can quote a price for materials, they can give you an itemized list of the materials they are talking about. You should not hire a contractor who hesitates to do this.