Is it bad when your brake pedal goes all the way to the floor? In a word, yes. Exactly how bad is a matter for discussion -- a discussion you really need to have with a reputable mechanic.
The brake pedal going all the way to the floor can be caused by a number of different issues. All of the possible causes need to be addressed, even if the car is stopping fine.
One of the more common causes for the brake pedal going to the floor is a loss of brake fluid. When you're out of brake fluid, your brakes simply won't work. This is pretty easy to diagnose: You should be able to see brake fluid underneath the car if there's a leak in the system.
Another possible cause is a bad brake master cylinder. The master cylinder is where brake fluid gets compressed. Pressure on the brake fluid cases the brakes to be applied to the wheels. If your master cylinder doesn't work properly, or only works sometimes, you're going to lose braking power, and occasionally your brake pedal will go all the way to the floor.
Here's an additional reason a brake pedal could go all the way to the floor: a bad brake booster. The booster is a mechanism that uses vacuum pressure to take the force being applied to the brake pedal and amplify it. If the booster is bad, then the full amount of force needed to activate the master cylinder and pressurize the brake fluid isn't going to be there. The pedal will go all the way to the floor and the car will be harder to stop.
There's one more thing that could be causing the brake pedal to go all the way to the floor: you, the driver. The more the brakes are used, the hotter the brake fluid gets. The hotter the brake fluid gets the more liquid it becomes. It sounds silly, but it's sort of like what happens to Jell-O on a hot day: it goes from a thickish liquid to a thinner liquid. When the brake fluid gets hot and thin, it needs more force to be pressurized enough to operate the brakes; your braking system may not be able to generate the force necessary. So, if your brake pedal frequently goes to the floor and you can't find a mechanical reason, check out your driving style. Make sure you aren't riding the brakes, and always make sure you take off the parking brake before you head out.
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