Jane has some good points, but her opening statement that fiction writers are liars does not sit well with me.  On the contrary, good fiction is all about the truth.  OK, maybe it is elaborated, maybe some scenarios are far-fetched but to be believable the characters have to be real.  Not real in the sense that X is a pen portrait of Mrs Y down the road, but real in the sense that their characteristics, the things that have happened to make them who they are, should be real.  The characters in my books are an amalgam of people I have known or met over many years.  No-one will recognise themselves but the accumulation of information I have absorbed about people’s behaviour helps to make my characters credible.  

Even with historical fiction it is the same.  Human behaviour has not changed over the years.  This is what is so astonishing.  The overlay of fashion, speech, social mores and life style maybe, but read Georgina, the Duchess of Devonshire and you will find beneath the 18th century facade, a very modern woman.   Read Anna Karenina and you will find her heartbreak and problems are universal.  Read about the intrigue and double-dealing in Tudor England and you could be in a John Le Carre spy novel. Human nature remains unchanged, no matter what century you are in.

If you want to write historical fiction get your background 100% correct and then create your characters.