My definition of 'bad' materials (as far as using in a quilt) - I try to avoid using them -
Assumptions: Now I soak fabric in hot water until it cools down (at least an hour) - wash GENTLY with mild detergent - rinse GENTLY - and for yardage, I dry in the dryer or line dry (depends on whether dryer is handy or not). Bit and pieces are laid on a towel or dried on a rack.
1) It ravels badly - if I look at it wrong, it will be shedding threads - easy for the seams to come apart
2) It is flimsy - if it looks like it could be used for gauze bandages, it probably will not hold up well
3) It is still bleeding - if it's been rinsed and/or washed through 20 (really!) changes of water, and the water is still brighter than kool-aid - toss it - can't count on the next owner to use due diligence when washing it
4) If it is printed dreadfully off-grain (unless you don't care) - I try to check grain lines before purchase now
5) If it wrinkles badly -
6) If it smells funny
7) If used fabric - I give it some yank tests to make sure it hasn't gotten weak - some garments will have spots that are useless and still have usable areas - look for fading -
Sometimes an old quilt will still be good - except for all of the pieces cut from one or two particular fabrics. I hope to avoid that scenario.