Most of us who begin collecting coins are confused at  the numerous guides and grading guidelines that  are existing. We tend to be silent in the presence  of  more knowledgeable collectors, coin dealers, authorities or "experts". The truth is, grading knowledge is simply a result of experience and interest in the subject.  The most important part of coin grading is working on setting guidelines for yourself. Down the road, what one person calls "very fine" may not be up to your standards. 

 Grading is best began in steps, from uncomplicated on up, so take the simplest steps first. Below is a guide that breaks grading into a few basic categories. We often overlook the the most important and vital aspects of grading and move on to the technical (wear degree) features first.

Quality!  Quality!  Quality!   Overall Appearance and Appeal 

If a coin is damaged, cleaned or unattractive, the wear grade (good, very fine, etc) really doesn't matter. All of us should collect coins for investment as well as enjoyment. A few nice coins are better than a handful of problem coins. Any coin that is cleaned, gouged, bent or has any damage has little value for most collectors. Most buyers would prefer a nice no problem very fine condition silver dollar to an extra fine dollar that has been cleaned or damaged.  Of course, nearly all circulated coins have some problems from very small dings up to bored holes. At what point or degree do imperfections  become unatractive to you?  And to others as well when you sell?

Always look for damage before grading any coin. Look for rim dings, scratches, cleaning, dipping, cleaning or whatever may distract from the value or sight appeal. Make it a point in your collecting plan that any coin that is damaged should be discounted by the same degree before you think about acquiring it. Pricing guides for coins list values for the best no problem examples of each coin and grade.  Offer a dealer what you think would be fair for the overall condition and appearance of his coin.

Examples of buying:

The coin is graded Very Fine by the dealer, which is true. But a large gouge takes far away from the appropriate Very Fine value. There is bad damage making the coin worth little.

Cleaned coin:

We see harsh cleaning (odd color/shine, unnatural minute scratches) on this coin which destroyed the original  surface. Look how this coin reacts to light compared to the Mercury dime below. Almost worthless!

A good example of the correct "hourglass" appearance under light. Note the mint frost of the service is not too smooth and shiney. Cleaning will remove this frost.  

I see a coin that technically grades XF because of wear, but there is a dark  unsightly smudge and light cleaning. I need this date but I should wait and find a better example. I could offer the FINE value for this coin but I would not attempt to sell this coin with a set or collection. I don't want such an example to taint the collection as a whole.

I see problems with this coin ( rim dings) but it is still  a desirable coin and date to me and not cleaned. If I can buy it at the right price I can enjoy it now and not lose in the future.

Many coins, such as Seated Liberty, Bust half dollars, large cents and early dollars are worn beautifully in lower grades with an "old west" essence.  Rim dings and small abrasions are more acceptable, but always pay accordingly!

 Only ten to twenty percent of pre-1930 coins you see anywhere are actually quality coins, even perhaps in uncirculated grades. Though a coin may technically have a certain wear condition,  other factors can take away from overall quality.  If you buy a coin that is appealing and problem free, even if you missed a technical grade, you still have a nice coin. All collections have less than great quality material, just be sure to pay accordingly.  Remember though, all buyers are looking for quality when you decide to sell.

The Great Divide- First Steps on Wear Grade

Nearly all guides on grading leap directly into several confusing categories on wear grade with each particular coin type.  Basically, all coins are graded the same, they only have different surface features that wear.  All coins begin wear at the highest points. Knowing the original uncirculated features shows what will be missing with wear. 

 First, if we divide the point in which coins have some wear and actually begin to lose features, we can distinguish circulated condition in two categories very quickly. ALL coins, Very Fine and better have nearly all original features. There are degrees of wear but nothing is missing. Coins graded Fine and below begin to lose details in degrees.

Lincoln cents should show full wheat lines on the reverse to be very fine. If not, it is fine or below.
Buffalo nickels should have the horn of the buffalo fully outlined and visible. If not, it is fine or less.
Walking liberty halves should show the full outline of liberty's breast garment. If not, it is fine or below.

Knowledgable collectors know this because these are the points on these types that tend to wear away first.

Any coin should have nearly if not all the features it started with still visible on the coin  to be at least in Very Fine condition. These features may not be sharp like when the coin was struck, but they should still appear. When features of any coin disapear with wear, it is in fine or less condition.
To help familirize yourself with grading, start with any coin series. If you begin with Mercury dimes, study the designs and features of the coin. Look for the highest points of the coin that you think may begin to show wear first and where would the coin eventually loose features with heavy wear.  The diagonal lines of the fasces on the reverse is one place that would wear first.  Look at the many degrees of wear on various Mercury's and see how the lines appear to fade and then become incomplete. If there is wear to the point where part of the lines now disappear, you know this coin is in less than Very Fine condition.

Once this distinction is made in grading (complete or incomplete details), you can then much easier break down the degrees for any coins fine and below and for coins very fine and above.

LOW RANGE: About good to fine-missing details by wear

THESE GRADES ARE MOSTLY ONLY IMPORTANT IN RARE DATES.

Low Range 1-15
Fair: Worn to the point that little or no features remain.
About Good: Very little detail, only largest features appear. Date should be readable. Not a collectable grade.
Good: Very worn with many details missing. Ok to fill voids in a collection but not investment material. 
Very Good: Worn to point that that finer details such as LIBERTY on headbands and shields are fading and not clearly seen. Lots of wear and missing details.
Fine: The design begins to show weakness and lose detail, some features, such as all letters of  LIBERTY on the Indian cent are not plain. If a certain detail of a coin is not clear, call it fine or below.

Mid Range- Very fine to almost uncirculated-MOST details clear
THESE GRADES ARE HIGHLY COLLECTABLE. LOOK FOR THE BEST NO PROBLEM COINS.

Very Fine:  Overall wear. Features are rounded  but are still plain. Details are worn but clearly visible. Some exceptions are very light details such as the diamonds on the ribbon of the Indian cent which very light wear can remove. Some series, such as most S-mint Buffalo nickels, are commonly softly struck and may not ever had a full horn or some details to start with.
Extremely Fine (XF): All features are bold and sharp but most of the  surface areas are lightly worn. Some original mint luster is desirable. 
About Uncirculated: Only the very highest areas are touched by wear. 90 to 99% of Lower features and much of the field should still be as uncirculated. Look for gray areas (or differences) on unprotected fields and compare original mint frost in fields behind date and lettering.

High Range-MS-60 to MS-70- uncirculated

Mint State 60: Clearly uncirculated but less than desirable luster or tone. Bag marks present more on larger coins.
MS 63: Very nice luster but still some bag or coin machine counter abrasion. No major nicks. Overall much superior to common MS 60. This grade should be the majority of an original uncirculated roll. 
MS 64: Brilliant surfaces with few very minor flaws anywhere. Often, this grade would jump to 65 if not for distractions in prime focal areas.
MS 65: The very high end coins that few achieve. Exceptional luster. Original strike qualities are sharp. 
MS 66 to 70: Almost unseen except in very modern coinage. These grades are still debated and speculative. 

Again, set standards for yourself! How much original mint luster do YOU want to see on an about uncirculated coin? How clear should the details and features of an very fine coin be to you?  Could it be said ALL coins have some distraction when examined?

Cleaning nearly always ruins coins and their value. It's best not to clean your coins or to buy any that are. To determine cleaning, turn the coin in light to look for the natural reflections from the mint strike on both circulated and uncirculated examples. Cleaning causes either a high shine or a "thud" flat effect in luster whereas the natural gleaning hourglass reflection is gone. Look at recently minted new coins for examples of mint luster. Note the mint frosty surfaces, which light cleaning or rubbing can remove. Check for differences in the open fields and fields behind the date and lettering.  Try different methods of cleaning on circulating coins (pocket change) and see how it alters the surfaces on even hard clad and nickel coinage. The results are most always detrimental and take away from the natural patina.  Learn to recognize mint frost. Only modern proof coins should have the very smooth mirror like finishes.

Cleaning causes unnatural tone by minute scratches, surface abrasion and removal of mint striking frost. Always get advice and opinions from those experienced if you think improvements can be made to a certain coin by cleaning. Ask others if they think a certain coin may have been cleaned or whizzed and ask why.

Today, dealers and collectors alike rely on the major grading services more than ever. Because these services depend on their reputation to stay in business, their grading is mostly dependable and accurate although be sure to get an idea of which companies are more accepted. Their grading is also known as "Market Grading", that is, helping to set a standard for price and rarity within the commercial market. Market grading takes into account not only wear and abrasion but qualities such as luster, strike and eye appeal along with other factors. The better companies will not certify any coin that had been cleaned or tampered with and they have invaluable experience in detecting counterfeits and fake toning.  Some grading companies will label the holder describing problems but the better companies will not certify a problem coin. The holders themselves offer protection and a tamper guard, though there are few good ways to assemble these bulky contraptions together in sets.  It's easer now to buy coins "sight unseen" from anywhere they are available because of certification.
       Even professional grading has its drawbacks though, especially in the area of Morgan dollars (being very popular), because there are (even more!) unlisted degrees within specified grades. For example, there are experts who can recognize a "high end" MS 64 dollar, that is, one they think could grade higher.  They will "crack" the coin from its professionally graded holder, resubmit it and sometimes get the MS65 grade awarded from the same company(!), so even professional services aren't flawless. On the other hand, some think part of their coins return under-graded. Of course, buying in the sight unseen market, you will most likely receive a middle to low end coin in specific grades. It's wise to inspect any certified coin first before buying.
       When buying from an ad or auction it's hard to imagine why a coin is not certified if it is in the over $200-$400 and over price range. If a rare date is offered with a price range in the thousands, flags would surely have to be raised if it is not certified. For example: the 1927-S Standing Liberty Quarter fluctuates wildly in pricing between grades. This coin is nearly always over-graded when I see it offered raw (uncertified). An XF will usually be a VF which is about a $800 price difference. Many are lightly cleaned. It's worth the cost of certification to me for such a coin, especially if I buy it sight unseen. Coin ads often list high priced uncertified coins for sale; if they were really nice and worth the amount listed, you can be sure in todays market they would have been certified. There are NO bargains in rare date and expensive coins. Beware if not certified by the top companies.
       Also, a point to remember is when you do sell, if your best coins are certified, there can be little potential down-grading by the buyer. The major grading services have helped for the most part to narrow grading to a more common standard for everyone involved and can be a protection for both the buyer and seller. The standards of grading are ever evolving and correcting  themselves (we hope!) as more is known and debated. Another good way to learn grading (and perhaps the discrepancies of professional grading)  is to collect low priced certified coins in different grades (circulated and uncirculated) for comparison. 

An interesting grade is About Uncirculated because there are a lot of possibilities for beautiful coins. Suppose we see a Morgan dollar with a fantastic strike, luster and brilliance and appears to be MS 65 or better, but say on the breast there are clearly small signs of wear. It is possible for this to occur and there is no other alternative but to grade this coin AU even though a lot of uncirculated examples may not be near as nice. Always check the highest features for signs of wear on any coin.

Split Grading is often seen at coin shows and in ads ( 1926-S Fine / Very Fine). This is a coin that a dealer thinks is perhaps better than, say, fine but not hardly full VF. It's like Saturdays fish catch gets a little bigger on Monday when it's described. Even if the coin is a nice fine, no amount of wishing will make it VF. No professional coin grading service will split grade because it's technically impossible, each grade must meet its criteria. Split grading is often seen on Standing Liberty quarters and Walking Liberty halves offered. 
Another way the term split grading is used is when one side of the coin grades better than the other. It makes sense that the lowest grade should ultimately describe the coin.  

It's often said that grading is subjective and not an exact science, which is true, but guidelines in wear grades are mostly clear after study and this is another reason to set your own standards. Uncirculated grading is first being sure the example is truly unworn and then being familiar with surface features such as brilliance and luster degrees, toning, bag-marks and other criteria. 

        Standardization of coin grading in  strike (the quality and sharpness of the design during production of coins) is almost impossible. Specific references are recommended for the type and series of coins one may collect. For example, most early S-mint Buffalo nickels are known to be soft struck. A P- mint of the same year cannot be compared to an S mint because the Philadelphia coins were generally struck much better. If you compare a 1926-P to a 1926-S in certified holders, both graded MS-65 by the same company, you will most likely see that the P mint is better struck even with the same grade. Since it is impossible for the S-mints of that year to compare to the P-mints, the S-mints have a standard of their own. Often, a certain date and mintmark is compared to what is known and available to itself and the grading services incorporate this into the final grade.
       Silver dollar dealer and author Wayne Miller, in his book: The Morgan and Peace Dollar Textbook, describes every date and mintmark of Morgans and Peace dollars. From his experience in seeing hundreds of thousands of silver dollars, he is able to relate what is typical and rare for each date in terms of strike, luster and bag-marks.  What may be an average strike for one specific date may be fantastic for another. Specific reference books describe the rarities, characteristics and strike qualities for each date and mintmark of nearly all series of coins. Some dates are known to have more bag marks on the average, sometimes rusty dies were used. A lot can happen from year to year in the different mints (and did! Striking pressure, availability and quality of dies, quality control, etc).  In other words, all coins are not created equal! 
        Also consider that even before striking, the processes in preparing the blanks for production could effect the finished product. The rolling mills, washing and heating of the metal would cause differences in hardness, color and final luster qualities. 
        It's important for the individual collector to set his or her personal standards for themselves. Start with a certain series (for example early Walkers, 1916-1933) or coin (1909-svdb cents) and learn from example (coin shows and shops, Ebay, etc).  Study and keep notes on what is common and uncommon in availability and quality. With this knowledge, later you will know a good example when you see one. 
       Each coin series can be a fascinating life long endeavor. Only recently have  rare over-date coins been discovered and more are sure to be found. The Lincoln Cent series hosts endless unfound possibilities for variations, double dies, mint mark placement and type, etc. NOTE: Lincoln cents have always been a favorite and now look for the series to catch on fire soon with the hundreth year of the set coming up. Collect the best early examples possible in higher grades. The 1914-D and 1922 plain should zoom off the charts.

       Remember that most coins for sale are graded for wear and certified coins are graded for market value. It's up to you to distinguish if there is quality and if the certain coin and grade meet the requirements you set.