Judging Coin Condition
A coin's condition is central to its value. The same type of coin that's worth tens of thousands of dollars in a mint, uncirculated condition can be practically worthless in poor condition.
To help provide a standard for collectors, the American Numismatic Association (ANA) created a scale of grades from 1 to 70. This is sometimes called the Sheldon Scale because it was first created by coin expert Dr. William Sheldon.
Unfortunately, there's still no 100% objective way to judge a coins' condition. Placing a coin on the scale cannot be an exact science because it involves factors such as factors as "overall appearance" and "eye appeal."
The closest you can come to an exact judgment is to send your coin to a professional grading service. The most well-known grading services are the Professional Coin Grading Service (PCGS), Independent Coin Grading Company (ICDC), Numismatic Guaranty Corporation of America (NGC), and ANACS. Using one of these services is advisable if you believe you have a very valuable, investment-grade coin. They will encapsulate your coin in plastic holder ("slab" it) along with their official grade.
Here are some guidelines for evaluating your coin at home. This will also help you know what to expect when you see these grades in a coin advertisement.
Poor coins are essentially uncollectible. They are completely or almost completely worn down to the point of being unreadable.
Fair coins are heavily worn but a few details are readable.
Almost/About Good (AG-3)
This is the bare minimum for a collectible coin. It is worn down and may be badly scratched and discolored, but you can make out the date and lettering.
A good coin is heavily worn but the major design elements are visible. The date and mint mark must be readable. Other details are completely rubbed down.
Very Good (VG-8)
Well worn but free of any major scratches or marks. Details on the highest points are completely rubbed down.
Moderately worn but the basic outline is clear. Most lettering and details are visible but somewhat weak. There may be nicks, scratches, and fading.
Very Fine (VF-20)
Moderately worn but all the details are clear. There may be some nicks and high points may be rubbed down a bit.
Choice Very Fine (VF-30)
Lightly worn, especially on the highest points, but all lettering and details are sharp.
Extra/Extremely Fine (XF/EF-40)
Lightly but evenly worn. All details are very sharp but there may be some slight scratches. There may be some of the original color (mint luster).
Choice Extra/Extremely Fine (XF/EF-45)
Lightly but evenly worn. All details are very sharp, and there is some of the original color of the coin.
Almost/About Uncirculated (AU-50)
Very light wear. There is about half of the original color.
Choice About Uncirculated (AU-55)
Very light wear. There is almost all of the original color.
Uncirculated/Mint State (MS-60)
The coin may have some small nicks and scratches from being in its original bag with other coins, but it has all its color and no trace of being handled.
Choice Uncirculated (MS-65)
Very few nicks and marks, brilliant color.
Perfect Uncirculated (MS-70)
Completely new. Absolutely no marks or scratches. Incredibly rare.
A proof is a coin that wasn't made for circulation. They are made for collectors through a special two-stamp process. Proofs can also be graded on the Sheldon Scale, generally between Proof-60 (a proof with handling marks and scratches) to Proof-70 (a perfect proof with absolutely no handling marks or defects).