The terms 'good' and 'bad' do not have unified meanings, people tend to define them differently.

Whatever are the definition, the perception, and the application of the definition, there is a tendency to identify yourself with 'good' and reject all that is 'bad'.

Possibly needless to say, this has no awareness increasing effect whatsoever; quite the contrary. Rejection causes ignorance, fear, separation, less personal power, a narrowing of choices.
Fear gives power to the object of fear. That's not efficient in relation to achieving anything. (Unless that's exactly your goal.)

If for some reason 'bad' is inside the perception of oneself and the division between 'good' and 'bad' still persists, the result is personal friction - loss of stable perception of self-identity.

It practically splits the person's perception of himself in two, the 'good' part and the 'bad' part. This results in a non-unified will, weakening the person.
("I want to do this. But it's bad; I don't want to do it. But I still want to...")

This unwholesome state, this indecisiveness in is reflected in that person's whole being, in his approach to everything, whatever he does.

If he does the 'bad' thing, he himself is 'bad' (bad - something that shouldn't be) and has to self-deny himself somehow, taking the form of either mental or physical torment, punishment.

That's the explanation for the need of penance: "See? I punished myself for being bad, now I can be good again. I won't be bad again, I'll do as you say. Don't hurt me again, I'll be good... Please..."

Fear is not 'bad' either, it's a state to experience if you desire: a state of being lost, a state of escaping/denying your whole Self - your 'dark side'.

Fear does not help you solve a problem; it helps you to state 'the solution is out of my reach' and ignore it. If you are convinced the solution is out of your reach, then it is.

There is nothing to fear, not even fear itself!

The only reasonable use of 'good' and 'bad' is their meanings being 'efficient or not efficient in relation to fulfilling a certain desired purpose'.