When you are looking around for the right contractor, ask for the contractor's license number. Then call up your state's Department of Commerce. The Department of Commerce for your state can tell you whether or not the contractor has a current license, and whether any complaints have been filed against the contractor in the past and if any disciplinary actions have been taken against the contractor.

Also call up your local Better Business Bureau for local references.

2. Ask a few other questions from the contractor.

There are some questions that you need to ask the contractor other than the typical questions about their bid and estimates. Here are some important questions to ask so that you can ensure the contractor's credibility:
Ask the different contractors where they have had businesses, and how long they have had a business.
Ask each contractor for some references. Then call up some former customers of the contractor. Ask the former customers about their satisfaction and whether or not they had any problems.
Steps to finding the right construction loan
1. Go through the pre-approval process.
When you find a lender for your construction loan, before you even apply for a loan, you need to go through the pre-approval process. The pre-approval process is basically just a shortened version of the construction loan approval process.
The pre-approval process consists of questions from the lender about your credit history, your collateral, your FICO score, and questions about the type of property that you are planning on building.
Based on your answers, the construction lender will determine whether or not you qualify for a loan. The lender will then give you a dollar range for loans that you are pre-approved for. At this point in time, the lender will also give you information about loan terms and interest rates for your qualified loans.
You need the loan information in order to find your contractor, your property, and your architect for your construction project. You will also have to get all of the information that you gave to the lender verified by an independent source.

2. Find your loan.

Having gone through the prequalification process, you should have already gathered together all of the necessary information and forms, such as your credit history, your collateral, and so on. You should have hard copies of all of this information. Having all of this information together will make the loan process easier for you. Also, since you have been pre-approved, you know what kinds of dollar amounts you will be looking at from lenders.

When you apply for the actual loan, you will probably get a number of different documents that you will have to fill out. While the forms vary from lender to lender, here's a general checklist of forms:
The application checklist form
The description of materials form
The residential loan application form
The construction costs breakdown form

When you are filling out these forms, two of the ones that you need to be extra careful about are the application checklist and the residential loan application. You will also want to hang on to the other two, the construction costs breakdown and the description of materials, so that you can refer to them during the building process.

Start shopping around for lenders to find the right loan with the right information and setup for you. Remember as you shop around that you will have to probably provide the following information:
Employment information, whether you are an employee of someone else or self-employed.
Personal asset and liability information, including bank information.
Detailed information about your ownership of the lot on which you will want to be building. This means a copy of the deed or a copy of the earnest money agreement.
Documentation for the project
Working drawings

Now that you have all of this information, you can be set to shop around to different lenders.

Be prepared, when you meet with lenders, to know what exactly your budget parameters are and what is going to work best for you. This will help you avoid being pushed around. If anyone treats you badly or arrogantly, move on to the next lender.

Don't feel rushed to make an immediate decision. Shop around, take all of the different proposals home, and think about them for a while. Think about which one is going to work best for you on both a long term and a short term basis.