This is a common problem, especially for pre-modern historians. Here are some common questions:

1. How reliable is the author (if known)? Authors known to be accurate are more likely to be taken at their word.

2. If the author is known, does he have more than one extant work, and how reliable are those works? If their other works are questionable in their content, the one being examined has a higher chance of also being inaccurate.

3. Why did the author write the work in question (which is often a question with no definite answer)? If it was financed by someone featured heavily in the work, a reasonable bias can be assumed. This goes the same for religious motivations, political gain, etc.

4. How many demonstrable errors are there in the work? A work with a bunch of errors has to be used cautiously and carefully vetted.

5. How was he perceived by his contemporaries? An author who was universally acclaimed is probably a pretty good source.

Here's a couple of medieval examples:

Geoffrey of Monmouth wrote The History of the Kings of Britain and it was massively popular in the middle ages, over 200 manuscripts survive, and he was cited and quoted in many chronicles, histories, and pieces of literature. An author cited this often must be good right? Well, William of Newburgh, in his History of English Affairs, blasts Geoffrey for being a bad historian and writer of lies. Who to believe? Modern historians have verified William's chronicle as good, accurate, and generally reliable. Geoffrey, who also gives us the first extensive look at king Arthur, is much less verifiable. William provides us with sources and citations, Geoffrey simply says he got his info from an old book. Thus, modern historians have generally agreed with William, whose info can be corroborated with many other sources, rather than Geoffrey, whose info includes a lot of semi-legendary figures and largely unverifiable information.

The second example is the famously forged document, the Donation of Constantine. This document supposedly promulgated by Constantine the Great stated that the authority of the Western Empire was to be transferred from him to the Pope upon his death. It was used especially in the 13th century to help justify the political authority of the pope. In the middle ages it was accepted as authentic and, like, Geoffrey cited time and time again in many sources. There was no older source besides the one accepted as true, and there was no reason to doubt its authenticity, so it was assumed genuine. However, Larenzo Valla famously proved it as false in the 15th century by using a philological and paleographic analysis of the document. The word choice and letters were not those of the fourth century.

So, the short answer is that sources that cannot be corroborated with other sources are approached cautiously by modern historians. If the source has passed multiple analyses by scholars, it may become accepted as a good source.

Here are some sources that explain these kinds of things in more detail:

1. Richard Moll. Before Malory : reading Arthur in later medieval England (Univ. of Toronto, 2003).

2. Alison William, et al. Chronicling history : chroniclers and historians in medieval and Renaissance Italy (Penn State, 2007).

3. Michael Bentley. Modern historiography : an introduction (Routledge, 1999).

4. Georg Iggers. Historiography in the twentieth century : from scientific objectivity to the postmodern challenge, with a new epilogue by the author (Wesleyan University Press, 2005).

5. Gabrielle Spiegel. Romancing the past : the rise of vernacular prose historiography in thirteenth-century France (Univ. of CA, 1993).

Hope this helps a little. Happy Reading!