"Saints" are holy ones. In the Bible, three different words are used. One word, used only in the Old Testament (Hebrew chacidh), means good or righteous (ex. 1 Samuel 2:9). The other two words (Hebrew qadhosh and Greek hagioi) mean holy, consecrated (set apart) to God (ex. Deuteronomy 33:3, Acts 9:13, Romans 1:7). This second sense is not about the character of the person, but about his or her relationship to God. Only God can put someone into this relationship.
Paul called the Corinthian believers saints in 1 Corinthians 1:2 (the words 'to be' are not present in the original languages). This is significant, because by any moral standard, they were not qualified to be called saints. They were divisive and sexually immoral. Yet, Paul called them saints because they were "sanctified in Christ Jesus".
Of course, Paul exhorted them to live up to their calling - that was the purpose of his letter. But positionally, they were already holy, even in their carnal condition.