Right, sorry this took me so long to get around to but it's a rather tricky question and I've been quite busy.

On the one hand the answer is obvious. Knights (I'll use the term loosely) of renown did not rely on reading histories written by contemporaries to hear about the exploits of other knights. Imagine you were a footballer, would you need to wait to read John Smith's The Lion and the Wizard to hear about the skills of Lionel Messi? Of course, less slips through the cracks now (which could be a problem in medieval periods) but famous knights tended to build up reputations through several channels, often lost to historians.

1. Witnesses

If you are a knight you may well witness the deeds of arms of others. Much of the spirit and courage of chivalric culture relied on their being witnesses to your actions (whether to shame you for cowardice, or praise you for boldness). Much of the martial aspect of the chivalric ethos seems more inclined to inducing courage than praising prowess. Not to say prowess wasn't important - but it's difficult to demonstrate prowess if you're constantly fleeing dangerous situations. Those who combined martial prowess with honourable deeds won what was literally called the 'worship' of their peers. Winning worship was the chief aim of a knight, especially in romance, and this lay at the heart of the desire to not only perform deeds of arms but be witnessed doing so.

Tournaments were excellent gatherings where prowess might be proved, reputations enhanced, and worship won. Like warfare there were varied groups from divergent national or regional identities and many witnesses not only to the deeds themselves but the aftermath - where the victorious knight would have captured and received the promise to pay a ransom by their fellows. This pledge centred upon the honour system but also required witnesses to ensure it was kept. This meant that people would know if such-and-such did not pay his ransom and thereby enhance the reputation of his captor and quite drastically destroy his own.

2. Word of Mouth

The ransom idea links nicely into word of mouth as a form of communication. One need not bear witness personally to the deeds of arms but, especially the young and journeyman knights, might gather around a campfire on a dark night to hear the stories of the more grizzled veterans who had borne witness, or were retelling their own deeds of arms. Here is how Geoffroi de Charny (1304?-1356) admonished young or aspiring knights to learn the art of war:

§17 And the more these men see and themselves perform brave deeds, the more it seems to them, because of the high standards their natural nobility demands of them, that they have done nothing and that they are still only at the beginning. And as a result of this, they are still not satisfied, for they have heard talk as to how one should fight on the battlefield, men-at-arms against others, and they hear those who were there recall the great exploits that good warriors achieved there; then it seems to them that they have seen and done nothing if they do not take part in such a noble form of military activity as a battle. They therefore take pains to travel to different places and to endure great physical hardship in their journeys through many countries across land and sea. And when, through the grace of God, they find out and witness such supremely noble affairs as battles, (...) The question which is the better of two revolves around the honors, of which one is more worthy than the other. Every man who does well in this military vocation should be prized and honored, and one should observe those who are best and learn by listening to them and by asking about what one does not know, for they ought rightly to know better how to explain, teach, and advise than the others, for they have seen and known, taken part in, experienced, and proved themselves in all forms of armed combat in which good men have learned and learn how to excel. It therefore follows that they should know how to speak about everything that concerns armed combat and many other matters. And in relation to such talk, some might argue over and question which might be the kind of person from whom one might derive the greatest benefit. Would it be the impoverished companions who make and have made a name for themselves in the manner explained above, or would it be the great lords who want to make their reputation and have done so in the same way, and are of equal worth in wisdom and in conduct, and in skill and performance in combat? It seems to me that one can give a good answer to this question, for the impoverished fighting companions rightly deserve esteem and praise, those who with their limited resources set out to make such strenuous efforts and exertions, through which they achieve such noble prowess and such great understanding that the renown of their exploits spreads everywhere, which, up until then, had been held to be of little account, nor would they ever have won this reputation if they had not first had the courage to set about achieving the good deeds of arms spoken of above. And from this honor they gained recognition, rise in status, profit, riches and increase in all benefits. It is, therefore, more necessary for them, in their own interest, to perform and have performed these above-mentioned noble deeds than it is for great lords who have no need to go anywhere to become known, as their rank ensures that they are well known; nor do they need to travel about in order to be served and honored, as their rank entitles them to this; nor can necessity move them to go forth in search of financial gain, for they already have considerable riches. Nor do they have any great need after this to travel abroad in search of pleasure or entertainment, for they can have as much as they want in their own land and territory. One should therefore take far greater account of undertakings involving physical hardship and danger which the great lords are prepared to and do embark on of their own free will without any need to do so other than to achieve personal honor, with no further expectation of any reward for the money and effort which they devote to performing these great deeds of arms; these enterprises should be valued more than those of men who expect some profit or advancement or rise in status as a reward for the honor which they have won or are winning.

Geoffroi de Charny, A Knight's Own Book of Chivalry, intro. R. Kaeuper, trans. E. Kennedy, Philadelphia, 2005.

Charny was perhaps the most famous knight of his generation. He wrote this book for the highest order of French chivalry, The Company of the Star, which had been founded in response to the shocking defeat at Crécy (1346). Charny was to lose his own life at the Battle of Poitiers and the Order itself floundered. As you may have noticed Charny was aware that people could slip through the cracks of medieval communication channels:

Sacrifices Made by Men-at Arms Whose Deeds Remain Unknown

§14 I must now consider yet another category of men-at-arms who deserve praise: that is those who devote a good part of their own financial resources and suffer physical hardship in the search for opportunities for deeds of arms in a number of countries; and they may well find many such opportunities and incur no reproach on many good fields of combat. But it so happens that few learn of their exploits but are only aware of the fact that they have been there, which is in itself a fine thing; for the more one sees great deeds, the more one should learn what is involved and should talk and take advice at the places where feats of arms are performed or where one is engaged in other activities. And because of this they deserve to be praised and honored: although their deeds have been of little account, they have done no ill; for it is very important in such activity to pause and look. Hence so it is that he who does best is most worthy.

Word of mouth did not merely encompass the stories told to aspiring youths. Romances captured the deeds of the living and the dead alike. There is a two-way traffic between Romance and reality. William Marshal (d.1219) was famous in his own lifetime not merely for his deeds of arms but his political and diplomatic power. Yet in the biography written shortly after his death the parallels between him and Lancelot, whose mythos would really kick-off in the 1220s when the Marshal's biography was written, become clear.

To conclude, knights did not rely on histories to know of the prowess or cowardice of their fellows. The communication channels at the time were not perfect but it would be likely that your fellows knew who you were. In regards to reputation it was probably more important to be known as honourable and faithful, because if you were captured or had captured a knight you'd want to know whether it was worth surrendering or receiving a surrender - ie. that they would pay the ransom promised!