Banknotes are usually graded on a descriptive scale of grades. These grades vary somewhat internationally, and as time goes on more grades have been added. The grades specified by the International Bank Note Society are as follows:
- Uncirculated (UNC) – refers to a banknote that is bright and has no handling damage, such as folds or creases, nor any cuts, stains, or rounded corners
- About uncirculated (AU) – a banknote that is still bright but has trivial handling damage, i.e. a light center fold (not a crease, which is a break of the fibres of the paper), without rounded corners.
- Extremely fine (XF or EF) – a banknote with one crease or up to three light folds. Paper still bright and attractive, very slight wear to corners allowed.
- Very Fine (VF) – Note still attractive, but possible slight dirt or smudging, may have several horizontal and/or vertical folds. Paper remains relatively crisp. No tears, but slight wear to edges and corners is allowable.
- Fine (F) – Paper is now slightly soft, considerable wear due to folds from use in circulation. Minor tears to note, not extending into the design. Clear but not bright in appearance. Staple holes but not holes due to folding.
- Very Good (VG) – Much wear. Paper is limp. Tears can extend into the design. Staining possible. Discoloration possible. Hole at center caused by folding allowable. Note still looks presentable.
- Good (G) – Very much wear, as VG, but more so. Graffiti on note. Small pieces of the note may be missing
- Fair – Larger pieces of note torn off/missing, compared with G. Less of the note intact.
- Poor – Severe damage due to wear, staining, missing pieces, graffiti and/or holes. May be taped together, have pieces missing. The worst possible condition.
In addition to these grades, it is common to indicate an in-between grade, such as AU-UNC, which is a note that falls between AU and UNC, (e.g., a note with a noticeable counting fold).