Quite a number of factors need to be taken into account when choosing the names for characters. Some apply to any form of fiction such as ensuring that the character names are distinct and not easily confused with other characters, that they do not sound alike or look similar on paper. Even initials need to be checked to make sure they aren’t that of a known acronym. The name needs to suit the character which means checking its meaning so that it is not at odds with the character’s personality – unless you intend to be deliberately ironic. There is also the issue of using names that are strongly associated with a known character, fictional or real. For example, Rhett will immediately bring to mind Rhett Butler, Winston either Churchill or Winston Smith. (Just another reason why anyone writing fiction must read extensively.) You may not want that association.
With historical fiction, names should also suit the period of the story. A writer’s credibility will be a bit shaky if he or she names an Elizabethan character Jaxxon or Sheralene, though sometimes period names can sound quite modern – Parnell and Josian are both female baptismal names from the Elizabethan period. Baptismal registers are a good source for authentic names in any period. These are easily available now either through the subscription genealogy sites or through various local history websites and sometimes reveal surprising gems – Salatheill Kynderley and Amphillis Dybold did live in Norwich in the 16th century.
If you are writing a story closely based on fact there is the added problem of naming practices which result in several generation having both the same baptismal name and surname. Families often deal with this and by calling people by their middle names. If there are no middle names, diminutives can be used. Three generations of Henrys can be called Henry, Harry and Hal; Catherines can be Catherine, Kate, Kitty.
Of course, even historical fiction is fiction and, ultimately, you can do what you want. If you include your reasoning in the Author’s Note at the end, the anachronism hunters will be somewhat mollified.
– Name Nerds has an interesting list of names with medieval and modern diminutives
– Renaissance Faire – Christian names
– Renaissance Faire – Surnames names
– Guild of St Michael – List created by author of the site ‘after hearing one too many characters called “Chastity Sweetlips”.’
– Popular Elizabethan names