There are two primary categories of grace: actual and sanctifying. Actual grace is extrinsic to the soul, meaning that it is an impulse to do good or avoid evil that is sent by God and acts upon the soul much like a tugboat gently nudges an ocean liner to move in a certain direction. Sometimes the nudges aren't very subtle, as in the case of Saul who received a massive blast of actual grace on the road to Damascus in Acts 9:1-8. This actual grace "nudged" him to convert to the Catholic faith. Sanctifying grace, on the other hand, is intrinsic to the soul, meaning that it inheres or takes up residence in the soul. When Saul surrendered his heart to Christ and entered the Church the Holy Spirit infused his soul with sanctifying grace.
Moral theologian Germain Grisez explains that
Sanctifying grace refers to that in Christians by which they are transformed into the adopted children of God. The share in divine life which God offers created persons is a real regeneration, a second birth. Christians possess a new life which is their own (see Rom 6:4); they are new creatures (see 2 Cor 5:17), new men and men re-created in justice, holiness, and truth (see Eph 4:24). This new life is "grace" because it is a divine gift, "sanctifying" because it really transforms a person with the holiness of divine life. . . .
The expression actual grace is used in various contexts with diverse references. The common element lies in the fact that the various realities referred to move people to act in ways which positively contribute to God's redemptive work. Thus, actual grace can refer to God's causality, insofar as God brings sinners to conversion and causes the good deeds of the saints. It can refer specifically to the work of the Holy Spirit in Christians, helping them in their weakness and nourishing their holiness. Sometimes "grace," in the sense of "actual grace," refers to created entities conducive to anyone's salvation or the good of the Church. A pious thought, a chance encounter, or even a difficulty which conduces to holiness is called a "grace." (Christian Moral Principles [Chicago: Franciscan Herald Press 1983], 1:614)