Careful consideration must be given to the condition of a coin before arriving at its value, as even a minor difference in grading can mean a substantial difference in price. There are several factors to keep in mind when considering varying grades of preservation. Determining the condition of a coin is both an art and a science. Complete agreement on the grade of a particular coin between two different graders is not always guaranteed to happen. The following chart shows the various grades of coin based on the 70-point Sheldon Coin Grading System:

Sheldon Scale for Grading U.S. Coins
Poor-1 or P-1 (Poor) - The type is barely discernable, but little else, due to the coin being badly damaged or worn smooth.

Fair-2 or FR-2 (Fair) - Type and date are barely discernable, but otherwise the coin is damaged or extremely worn.

AG-3 (About Good) - Type and date are discernable, although some spots may be worn out. Some lettering should be apparent, if not necessarily readable.

G-4 (Good) - Major devices and features are evident as outlines. although the coin overall is heavily worn.

G-6 (Good-plus) - Coin has a full rim plus major devices and features are clearly outlined. Heavy wear.

VG-8 (Very Good) - Full rim with clearly discernable devices and features. Most legends are readable clearly, but the whole coin is still significantly worn.

F-12 (Fine) - Distinct rim, all legends readable, clear devices showing some detail, but the whole coin is moderately, but evenly worn.

VF-20 (Very Fine) - Clearly readable but lightly worn legends, devices show good detail, rims are clean, but the whole coin shows moderate wear on the high points and a little wear below.

VF-30 (Good Very Fine) - Legends are clear, devices show all detail with little wear; high points are lightly worn.

EF-40 (Extremely Fine) - Legends are sharp, devices are clear with slight but obvious wear on the high points.

XF-45 (Choice Extremely Fine) - Legends and devices are clear and sharp, with slight wear on the high points, and great eye appeal.

AU-50 (About Uncirculated) - Sharp legends and devices show only a trace of wear on the highest points. There must be some remaining mint luster.

AU-55 (Good About Uncirculated) - Sharp legends and devices show only a hint of wear on the high points. Remaining mint luster must be at least half; great eye appeal.

AU-58 (Choice About Uncirculated) - Virtually uncirculated, except for minor wear marks on high points. Nearly all mint luster must be present, and must have outstanding eye appeal.

MS-60 (Mint State Basal) - Coins in this grade are ugly, dinged-up, bag-marked, ill-toned specimens, but they are in mint condition and free of any wear!
The grades from MS-60 to MS-70, as well as the Proof designations, are all based primarily on eye appeal, quality of luster and/or toning, and the presence or absence of contact marks, hairlines, etc. All coins MS-60 and higher are Mint State coins. It is worth noting that Proof is not a grade, but a type of coin.

If you have absolutely no idea how to grade coins, you have no business buying coins without expert help. However, with a little study and experience you can learn how to grade coins effectively. Start with the “Official A.N.A. Grading Standards For United States Coins” published by the ANA.