Coin grading is a system used to represent the physical condition of a coin. These grades range from Poor to Perfect Uncirculated. A coin with the grade of Poor would be completely worn while a Perfect Uncirculated coin would have very few flaws, if any.
U.S. coins are usually graded with a scale created by the American Numismatic Association. This particular scale ranges from about Good to Proof with 15 grades between that detail the condition of a coin. Proof coins do not receive an official grade since these coins were minted for collectors and display. The grade of a coin determines its overall value. The higher the grade, the more valuable the coin.
While it's possible for an individual to learn to grade coins for an approximate result, few people can grade coins on a professional level where even the tiniest flaw can affect the grade. Grading can also affect the value of a coin, sometimes by thousands of dollars.
Storing a coin properly is crucial to achieving the highest grade. This means the coin cannot have marks from minting and also must be free of marks from storage such as are sometimes caused by contact with other coins.