Quick Answer: Paper money is graded on a 1-to-70 numeric scale adapted from the Sheldon system. At home, you can accurately estimate a note's grade by evaluating four factors: centering, paper quality (crispness and brightness), the presence of folds or creases, and any damage such as tears, stains, or pinholes. Notes grading Very Fine (VF-25) or higher typically command the strongest collector premiums.
Understanding how to grade paper money is one of the most valuable skills a collector can develop. A single grade difference can mean hundreds of dollars on a rare bill. Whether you are building a collection, preparing notes for sale, or just trying to determine what your old $100 bill is really worth, this guide teaches you how to assess condition like a professional.
Why Grading Matters
Condition is the single biggest factor that determines a note's value after its type and rarity. Two identical silver certificates from the same series can differ in price by 10x or more based on grade alone.
| Example: 1957 $1 Silver Certificate | Estimated Value |
|---|---|
| Good (G-6), heavily circulated | $1.50–$2 |
| Very Fine (VF-25), light folds | $3–$5 |
| Choice Uncirculated (CU-64) | $12–$18 |
| Superb Gem Uncirculated (Superb Gem-67) | $50–$100+ |
The difference between a $2 note and a $100 note is condition. Learning to grade accurately protects you from overpaying when buying, helps you price notes correctly when selling, and lets you track your collection's real value.
The Paper Money Grading Scale
Professional grading services like PMG and PCGS Currency use a numeric scale from 1 to 70. This scale was adapted from the Sheldon scale originally created for coins.
The scale divides into two major categories: circulated (grades 1-45) and uncirculated (grades 60-70). Grades 50-58 sit in a transitional zone called "About Uncirculated."
Circulated Grades
| Grade | Abbreviation | Numeric Range | Key Characteristics |
|---|---|---|---|
| Poor | P | 1 | Barely identifiable; heavy damage, missing pieces |
| Fair | Fr | 2 | Heavily worn with major damage; all design elements visible |
| About Good | AG | 3 | Extremely heavy wear; margins may be incomplete |
| Good | G | 4-6 | Heavy wear and soiling; all major details visible |
| Very Good | VG | 8-10 | Well-worn but fully intact; rounded corners, dark creases |
| Fine | F | 12-15 | Moderate wear; visible folds, still relatively clean |
| Very Fine | VF | 20-35 | Light to moderate wear; some crispness remains |
| Extremely Fine | EF/XF | 40-45 | Minimal wear; full crispness with only light evidence of handling |
About Uncirculated
| Grade | Abbreviation | Numeric Range | Key Characteristics |
|---|---|---|---|
| About Uncirculated | AU | 50-58 | Appears uncirculated at first glance; one or two light folds or corner handling |
This is the trickiest grade range. A note might look uncirculated in a holder, but a single light fold drops it from Uncirculated (CU-60+) to AU-58 or lower. Learn to spot these subtle breaks in paper fiber.
Uncirculated Grades
| Grade | Abbreviation | Numeric Range | Key Characteristics |
|---|---|---|---|
| Uncirculated | Unc | 60-62 | No folds or creases; may have handling marks, poor centering, or minor issues |
| Choice Uncirculated | Ch Unc | 63-64 | No folds; clean paper with minor imperfections |
| Gem Uncirculated | Gem | 65-66 | Exceptional paper quality; well-centered with bright, original colors |
| Superb Gem Uncirculated | Superb Gem | 67-70 | Near-perfect to perfect; outstanding centering, margins, and eye appeal |
The Four Factors to Evaluate
When you pick up a note, evaluate these four factors in order. Together, they determine where a note falls on the grading scale.
1. Folds and Creases
Folds are the primary dividing line between circulated and uncirculated grades. Here is how to check for them.
How to detect folds:
- Hold the note at eye level with a light source behind it or angled across the surface
- Tilt the note slowly; folds catch light differently than flat paper
- Run your fingertip gently across the surface to feel for breaks in the paper fiber
- Check the most common fold areas: the center vertical fold, horizontal center fold, and corner folds
Fold count and grade impact:
| Number of Folds | Typical Grade Range |
|---|---|
| No folds | Uncirculated (60-70) |
| 1 light fold | AU-50 to AU-58 |
| 2-3 light folds | EF-40 to EF-45 |
| Several folds, still crisp | VF-20 to VF-35 |
| Many folds, softening paper | F-12 to F-15 |
| Heavy folding throughout | VG-8 to VG-10 |
| Heavily worn and limp | G-4 to G-6 |
2. Paper Quality
Paper quality covers crispness, brightness, and the overall feel of the note.
What to assess:
- Crispness: Does the note snap when you gently flex it? Uncirculated notes have a distinct crispness that circulated notes lose.
- Brightness: Compare the paper color to a known new note of the same type. Circulated notes darken from oils and dirt.
- Soiling: Look for fingerprints, smudges, and general dinginess. Light soiling can drop a note one or two grade points.
- Staining: Ink marks, water stains, rust spots, and adhesive residue are all considered damage and reduce the grade.
3. Centering and Margins
Centering matters most for uncirculated notes where it can mean the difference between a CU-63 and a Gem-66.
How to check centering:
- Compare the margins on all four sides of both the front and back
- Perfectly centered notes have roughly equal margins on all sides
- PMG expresses centering as a percentage split (e.g., 55/45 left-right, 60/40 top-bottom)
- Centering below 60/40 on any axis typically limits a note to CU-64 or lower
Centering guide:
| Centering Quality | Margin Split | Grade Impact |
|---|---|---|
| Well centered | 50/50 to 55/45 | No penalty |
| Slightly off-center | 55/45 to 60/40 | May limit to 64-65 |
| Moderately off-center | 60/40 to 70/30 | Limits to 63 or lower |
| Heavily off-center | Worse than 70/30 | Limits to 62 or lower |
4. Damage and Defects
Any structural damage lowers the grade further. These are the most common defects to check for.
| Defect | How to Spot It | Grade Impact |
|---|---|---|
| Tears | Visible separation at edges or within the design | Severe; drops multiple grades |
| Pinholes | Tiny holes from pins or staples; hold note up to light | Moderate to severe |
| Tape repairs | Residue or shiny patches, often at tears | Severe; noted separately on slabs |
| Writing or stamps | Ink marks, bank stamps, counting marks | Moderate |
| Trimming | Uneven or unusually tight margins | Severe; may be considered altered |
| Rust or foxing | Brown spots from moisture or metal contact | Moderate |
| Edge splits | Small separations along fold lines at the edge | Moderate |
| Rounded corners | Tips of corners worn smooth | Light to moderate |
Step-by-Step: Grade a Note at Home
Follow this process every time you evaluate a note. With practice, you can grade most notes in under 60 seconds.
Step 1: Wash and dry your hands. Oils from your skin damage paper currency. Better yet, use clean cotton gloves.
Step 2: Work on a clean, soft surface. A clean microfiber cloth or felt pad protects the note from scratches and dirt.
Step 3: Check for folds first. Hold the note to the light at a low angle. Count folds and note their severity. This gives you a starting grade range.
Step 4: Assess paper quality. Flex the note gently. Is it crisp or limp? How bright is the paper? Any soiling or stains?
Step 5: Evaluate centering. Measure or visually compare all four margins on both the face and back.
Step 6: Inspect for damage. Use a magnifying glass (5x to 10x) to check for pinholes, tape residue, tears, and other defects.
Step 7: Assign your grade. Start with the fold-based range, then adjust up or down based on paper quality, centering, and defects.
Step 8: Scan with CashScan. Use the app to identify the series, denomination, and any notable features. Combine your grade assessment with the app's identification to research accurate values.
Grading in Practice: Three Real-World Examples
Example 1: A 1957 $1 Silver Certificate
- Folds: One clear horizontal center fold, two light vertical folds
- Paper: Mostly crisp, slight yellowing at edges
- Centering: 55/45 both axes
- Damage: None
Grade: Very Fine 25 (VF-25). Three folds but still presentable with good paper and centering.
Example 2: A Series 2013 $1 Star Note
- Folds: None detectable
- Paper: Bright, snappy, original crispness
- Centering: 50/50 horizontal, 60/40 vertical
- Damage: None
Grade: Choice Uncirculated 64 (CU-64). No folds and good paper, but the slightly off-center vertical margins prevent a Gem grade.
Example 3: A 1928 $5 Red Seal United States Note
- Folds: Multiple heavy folds throughout, paper is soft
- Paper: Dark from circulation, noticeable soiling
- Centering: Hard to evaluate due to wear
- Damage: Small edge tear at top, two pinholes
Grade: Very Good 8 (VG-8). Heavily circulated with damage. The edge tear and pinholes could push this to a "net" grade of VG-8 net (meaning graded VG-10 for wear but knocked down for damage).
Tools You Need for Home Grading
You do not need expensive equipment. Here is what helps.
| Tool | Estimated Cost | Why You Need It |
|---|---|---|
| Magnifying loupe (5x-10x) | $8–$15 | Detects pinholes, fiber breaks, and counting marks |
| Desk lamp with daylight bulb | $15–$30 | Consistent, accurate lighting for color and fold detection |
| Cotton gloves | $5–$10 | Prevents oil transfer from hands |
| Mylar currency holders | $10–$20 (pack of 50) | Protects notes during and after evaluation |
| Soft work surface (felt or microfiber) | $5–$10 | Prevents surface damage |
| CashScan app | Free | Identifies series, checks for notable features |
Common Grading Mistakes
Even experienced collectors fall into these traps. Avoid them and your grades will be more accurate.
1. Overgrading your own notes. This is the most common mistake. Emotional attachment to notes you own biases your assessment upward. Be ruthless: if you are unsure between two grades, choose the lower one.
2. Missing hidden folds. Some folds are nearly invisible under normal lighting. Always tilt the note under angled light. A fold that you miss means the difference between Uncirculated and About Uncirculated.
3. Confusing "crisp" with "uncirculated." A note can be crisp from a light press or dry climate but still have folds. Crispness alone does not equal uncirculated.
4. Ignoring the back. Many graders focus only on the face. PMG and PCGS evaluate both sides. A perfectly centered face with a badly off-center back limits the grade.
5. Overlooking counting marks. Banks historically marked notes with small ticks or stamps during counting. These tiny marks are easy to miss but reduce the grade.
6. Misidentifying washed or pressed notes. Some sellers iron or chemically treat notes to remove folds and brighten paper. Look for unnatural smoothness, altered paper texture, and "ghosted" fold lines that were pressed but not eliminated. Washed notes grade significantly lower than original, unaltered notes.
When to Get Professional Grading
Home grading is great for organizing your collection and making buying decisions. But professional grading by PMG or PCGS Currency becomes worthwhile at certain value thresholds.
Professional Grading Is Worth It When:
- The note is worth $150 or more raw. Grading fees start around $22 per note (PMG economy tier). The encapsulation and certified grade typically increase the sale price by 20% to 50% for notes in this range.
- You plan to sell at auction. Major auction houses and serious buyers prefer slabbed (encapsulated) notes. Heritage Auctions and Stack's Bowers strongly recommend third-party grading for consignments.
- Authenticity is in question. Professional services detect counterfeits, alterations, and washed/pressed notes that even experienced collectors can miss.
- The note is a key date or rare variety. Star notes with low print runs, error notes, and scarce series command premiums that justify grading costs.
Skip Professional Grading When:
- The note is worth less than $50 in any grade
- The note is common and circulated (e.g., a VG-8 Series 1957 silver certificate)
- You are keeping the note in your personal collection and not planning to sell
PMG vs. PCGS Currency: Which to Choose?
Both services are respected and accepted by all major auction venues. PMG is the dominant player for U.S. paper money with a larger census and more active collector community. PCGS Currency has strong brand recognition from its coin grading service and is gaining traction.
For most collectors, PMG is the default choice for paper money. Use whichever service your target buyers prefer.
How to Improve Your Grading Skills
Grading is a skill that improves with practice. Here are proven ways to get better.
Study population reports. PMG publishes population data showing how many notes exist at each grade level. This helps you understand grade distributions for specific series.
Compare against graded examples. Browse Heritage Auctions' archive of past sales and study the photos of graded notes. Pay attention to what a VF-25 looks like versus an EF-40. Build a mental library of grade benchmarks.
Buy a few professionally graded notes. Having PMG or PCGS-graded examples in hand gives you reference points to compare against ungraded notes. Even a few common notes at different grades (VF, AU, CU) serve as an invaluable calibration set.
Practice with pocket change. Before spending money, pull notes from your wallet and grade them. Compare your assessments with CashScan's identification. Over time, you will develop the eye and the confidence to evaluate notes quickly.
Join collector communities. Forums like PaperMoneyForum.com and Reddit's r/papermoney regularly post "grade this note" threads. Participating sharpens your skills and exposes you to notes you would not encounter otherwise.
Key Grading Terms Glossary
| Term | Meaning |
|---|---|
| Net grade | A grade adjusted downward for a specific defect (e.g., CU-63 net for tape) |
| EPQ / PPQ | Exceptional/Premium Paper Quality; note has original crispness for the grade (PMG uses EPQ, PCGS uses PPQ) |
| Slab | The sealed plastic holder from a professional grading service |
| Raw | An ungraded note not in a professional holder |
| Eye appeal | The overall visual impression; two notes at the same grade can differ in appeal |
| Census | The total population of graded notes by type, date, and grade |
| Holder | Any protective sleeve; Mylar holders are acid-free and safe for long-term storage |
| Foxing | Brown spots caused by fungal or oxidation damage |
| Counting mark | Small mark made by bank tellers when counting stacks of bills |
| Press/pressed | A note that has been mechanically flattened to reduce the appearance of folds |
Frequently Asked Questions
What is the most important factor when grading paper money?
Folds and creases are the primary determinant of grade. A note with zero folds is uncirculated (60+), while each fold reduces the grade. After fold count, paper quality and centering further refine the grade. Use a strong angled light source to detect folds that might be invisible under flat lighting.
Can I grade paper money without a magnifying glass?
You can make a rough assessment with the naked eye, but a 5x to 10x magnifying loupe (available for under $15) reveals pinholes, counting marks, and fiber breaks that significantly affect the grade. For notes worth $50 or more, a loupe is a worthwhile investment.
What does EPQ mean on a PMG holder?
EPQ stands for "Exceptional Paper Quality." It means the note retains its original crispness, body, and texture for the assigned grade. Notes without EPQ may have been washed, pressed, or otherwise altered. Collectors pay a premium for EPQ-designated notes, often 10% to 30% more than non-EPQ notes at the same numeric grade.
How accurate is home grading compared to professional services?
Experienced collectors typically grade within one or two points of professional services for circulated notes. Uncirculated grades are harder to nail precisely because the differences between CU-63, CU-64, and CU-65 are subtle. For notes you plan to sell, treat your home grade as an estimate and let the professional service make the final call.
Should I clean or press my notes before grading?
Never clean, wash, iron, or chemically treat paper money. These alterations are detectable by professional grading services, and altered notes receive lower grades than they would have in original condition. PMG and PCGS both penalize notes that show signs of cleaning or pressing by withholding the EPQ/PPQ designation.
How do I grade star notes differently from regular notes?
Star notes are graded using the same scale and criteria as regular notes. The star designation affects rarity and value, not the grading process. However, because star notes with low print runs can be quite valuable, accurate grading becomes even more important for determining the correct price.
What is the difference between Fine and Very Fine?
A Fine (F-12 to F-15) note shows moderate wear with several visible folds, slightly soft paper, and possibly minor soiling. A Very Fine (VF-20 to VF-35) note has fewer folds, retains more crispness, and appears cleaner overall. The key indicator is paper snap: a VF note still has noticeable crispness when flexed, while a Fine note feels softer.
Conclusion
Grading paper money at home is a skill that pays for itself every time you buy, sell, or evaluate a note. Start by mastering the four core factors: folds, paper quality, centering, and damage. Practice with notes you already have, study professionally graded examples, and build your reference library over time.
For valuable notes, combine your home assessment with professional grading from PMG or PCGS Currency. And for quick identification of any bill's series, features, and starting value, scan it with CashScan.
For more collecting guidance, explore our guides on starting a paper money collection, rare serial numbers on dollar bills, and where to sell old paper money. If you collect coins alongside paper money, CoinID helps you identify and value coins in your collection.
Ready to identify your banknotes? Scan any bill with CashScan to instantly identify its series, check for notable features, and start your research.
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