I liked Chatanooga when I visited about 10 years ago. Of course, I was only a visitor - but was there for three days and got a chance to really look around.
From what I could see, Chattanooga's bad area seem to be west and southwest of Missionary Ridge.
Pretty much spot on. That is the area of the public housing projects.
The downtown area is really pretty nice. Back in the late '70s I started coming to Chattanooga from Atlanta to hang glide. Back then, Chattanooga was a dirty little mill town. The transformation of the riverfront started in the mid '80's and continues to this day. Now, it is one of the top tourist destinations in the SE.