Coin grading can be confusing, but it doesn't have to be. While it is still very difficult to gain the ability to grade a coin, understanding the grades can assist in valuing and buying coins.
Coins are graded on a 70-point grading scale with 1 being the worst condition and 70 being perfect mint state. The naming conventions can also lead to confusion, such as the grade of "Good" being a 4 out of 70 while "Fine" is 12.
1 : Poor
This coin is barely discernible. This coin is barely away from being indistinguishable.
2 : Fair
Type and date are barely discernible. Still extremely worn or damaged. Major details usually identifiable.
3 : About Good
Type and date are discernible, although some spots may be worn out.
4 : Good (G)
Primary devices and features are evident as outlines. Coin is still heavily worn.
6 : Good - Plus (G+)
Full rim, major devices easily identified. Features are clearly outlined.
8 : Very Good (VG)
Full rim with clearly discernible devices and features. Most legends are readable clearly, but still significantly worn.
12 : Fine (F)
Clear devices showing some detail, but whole coin is moderately but evenly worn.
20 : Very Fine (VF)
Clearly readable but lightly worn legends, devices show good detail, rims are clean. The whole coin shows moderate wear on the high points and a little wear below.
30 : Good Very Fine (VF)
Legends are clear and devices show all detail with little wear. High points of coin's design are lightly worn.
40 : Extremely Fine (XF)
Legends are sharp, and devices are clear with slight but obvious wear on high points.
45 : Choice Extremely Fine (XF)
Legends and devices are clear and sharp, with slight wear on the high points, and great eye appeal.
50 : About Uncirculated (AU)
Sharp legends and devices show only a trace of wear on the highest points. There must be some remaining mint luster.
55 : Good About Uncirculated (AU)
Sharp legends and devices show only a hint of wear on the high points. Remaining mint luster must be at least half in the coin should have excellent eye appeal.
58 : Choice About Uncirculated (AU)
Virtually uncirculated, except for minor wear marks on high points. Nearly all mint luster must be present and must have outsanding eye appeal.
60 - 70 : Mint State Basal (MS)
Coins show no signs of wear from circulation, but they are ugly (in fact uglier than an AU58). They are 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 proof designations, are all based primarily on eye appeal, quality of luster and or the toning of the coin. It depends on the contact marks and even hairlines.
Proof is a type of coin and not a grade. A non-proof coin can never be "pretty enough" to be proof. It is a different coin blank.
Why 70 and not 100?
The original system, created by Dr. Sheldon, was to help his research comparing the price of a coin to its grade. His conclusion was that on average large cents and half cents that were in uncirculated mint state (MS - 70) sold for 70 times more than a coin that was barely identifiable (Poor - 1).