Grace is a gift from God

It's stated in CCC  grace is a habitual gift, a stable and supernatural disposition that perfects the soul itself to enable it to live with God, to act by his love

There are two kinds of grace: sanctifying and actual.  Sanctifying grace stays in our soul and what make the soul holy and supernatural life.   

Actual grace is like a supernatural push or encouragement and does not live in the soul.  

Both of these helps us to elevate you above your regular nature, otherwise our souls are in its natural state which isn't by default not fit for heaven. Grace elevates nature , our intellects are given new power of faith.

This is why  supernatural life is also referenced sanctifying grace because we need it to get to heaven, and if our soul have sanctifying grace we will go to heaven unless we need to purify ourselves  in purgatory first.  

If it does not dwell in our soul due to mortal sin, then we are dead spiritually. Mortal means death and mortal sins kill of our supernatural life, so sin is like saying "No" to God and sanctifying grace is saying "Yes" to God. If we physically die from earth with no grace, we are forever separated from God which is hell, which is only caused by us to be that way.

God keeps giving you divine pulses or pushes along the way in our life, such as using the sacrament of penance ore reconciliation while venial sins weaken us to eventually fall to mortal sin, however venial sin does nto destroy our supernatural life itself.

To regain supernatural life, you have to receive actual graces from God, think of them as helping graces, actual graces enable the soul to perform a supernatural act.

Our protestant brothers deny this because since sanctifying grace implies a real transformation of the soul, they deny real transformation takes place.  They believe God doesn't actually  wipe away our sins or our souls become spotless and holy in themselves, but instead remain corrupted, sinful and that God throws a cloak over them and then treat it spotless, while knowing all the while they're not.

As Catholics we believe our souls really are cleansed by infusion of supernatural life.  St. Paul speaks of thsi from 2 Cor 5:17 about "a new creation, then noted in Eph 4:24 "created after the likeness of God in true righteousness and holiness"

Protestants also have a misunderstanding of Justification as it is only a forensic or legal declaration by God that the sinner is now justified, meaning your soul is in the same state as it was before but eligible for heaven. This is legal fiction because how can God say you are justified knowing you a sinner in not really justified but only under the cloak of Christ righteousness. 

So when God declares you justified , he make you justified. Any justification that is not woven together with sanctification is no justification at all.

The Bible teaches on justification when Paul indicates that there is real transformation that occurs in justification and that is not just a change in legal status, this is defined in Romans 6:7.  There is confusion in this passage "For a dead person has been absolved from sin.", in other revisions it say's "free from sin", The term in Greek "dikaioo" is the word for being justified, yet the context indicates sanctification, which is why every standard revision renders the word free instead of justified. So this shows in Paul's mind justification involves real transformation, in other words really being free from sin and not just a change of status.

Also sanctification and justification is not a one time even, but an ongoing process according to scripture, so it can be lost but recovered again as noted above through grace, however Fundamentalists go on to say that losing ground on sanctification will not effect your justification. Calvin taught that absolute impossibility of losing justification, Luther said it could but only lost only through sin of unbelief., in other words if you reject Jesus Christ your savior.  However we believe it can be lost in mortal sin. So we must continually seek God's grace, continually respond to the actual graces God is working within us and remember its a gift from God.

From the "Essential Catholic Survival Guide" Catholic Answers