When we receive Jesus as Lord and Savior, He no longer sees us as "bad." Because He died on the cross to pay for our sins (wrongdoings), when we accept His gift of eternal life, He sees us as He is: perfect. It is not because of ourselves or something we have done that He sees us as perfect, but because of what He did in dying for our sins. This simplifies the question about whether or not Jesus punishes bad people.

Jesus punishes those who do not accept His salvation--those who do not receive Him as Lord and Savior so that their sins may be washed away. He punishes them by sending them to Hell, allowing them to be forever separated from Him.

The lawful punishment for sin is eternal separation from God. But Jesus died on the cross and took the punishment for our sin upon Himself so that, by grace, we could receive Him as Lord and Savior and not receive the due punishment for our sin.

Those who do not receive Jesus as Lord and Savior today will also be judged by Him, as these Scriptures taken from John`s biography of Jesus show us:  "For God didn`t send his Son into the world to judge the world, but that the world should be saved through him. He who believes in him is not judged. He who doesn`t believe has been judged already, because he has not believed in the name of the one and only Son of God. This is the judgment, that the light has come into the world, and men loved the darkness rather than the light; for their works were evil. For everyone who does evil hates the light, and doesn`t come to the light, lest his works would be exposed. But he who does the truth comes to the light, that his works may be revealed, that they have been done in God" (John 3:17-21).

Read that quote in its context here.

But those who have turned to Jesus and received Him as Lord and Savior do not come under judgment. In the same way, neither are they punished for sin. Jesus took the punishment for our sin upon the cross and, by receiving His free gift of eternal life, we don`t have to again be punished. That is truly good news.