Usage
The first and easiest classification for a stamp is whether or not it has been used. A used stamp will be cancelled with a mark on its surface. The heaviness and quality of this mark will also be used to determine grading, but any stamp that has been sent through the postal service automatically is graded with an "O" for original. Unused stamps are graded with an asterisk (*), and unused stamps that have never been mounted in an album by a hinge get two asterisks (**). Hinges, which are a small removable piece of tape affixed to the back of the stamp, usually remove or damage the glue of the stamp's underside, and thus "hinged" stamps are generally considered less valuable, sometimes even half as valuable, as unhinged stamps.
Gum
The gum on the back of the stamp says a lot about its condition. It's been said that stamp gum is the most valuable substance on earth, because if even a tiny amount is missing or damaged, the value of a stamp can decrease dramatically. Some catalogs will give a general gum condition in the usage only, with the O/*/** system. However, more thorough gum condition abbreviations include "OG" for "original gum," "NH" for "never hinged," "LH" for "lightly hinged," "HH" for "heavily hinged," "HR" for "hinge remnant" when a piece of the hinge is stuck to the back, and "DG" for "disturbed gum" due to damage from something other than a hinge. The term "thin" refers to a small amount of gum lifted by a hinge, usually in the "LH" amount. Stamp grading experts will sometimes mark "RG" for "re-gummed" when they can determine that a stamp has had its gum surface reapplied, usually in an attempt to defraud buyers.
Centering
The location of the stamp image within its borders is another highly important aspect of determining the stamp's worth. The more perfect the centering, the better. Abbreviations include "S" for "superb" or perfect centering, "XF" for "extremely fine" or nearly perfect centering, "VF" for "very fine" or just slightly off centering, "F" for "fine" when the image touches the perforation or edges without having any part chopped off or missing, and "AVG" for "average" when the image is slightly cut off by perforation or bad centering. These abbreviations are used in combination, such as "F-VF," to indicate a close centering grade that could be judged either way by different graders or collectors.
Perforation
Most collectible stamps were issued in perforated sheets, giving the edges the scalloped appearance so iconic to postage stamps. Stamps issued in rolls or in square sheets are graded differently or not considered collectible at all. The condition of the perforation is also something to take into account. "SP" stands for "short perforation," in which the edges are slightly pulled or worn down but the main body of the stamp is untouched. "PP" stands for "pulled perforation" in which some of the edge is torn completely, sometimes even interfering with a corner of the stamp image. "RP" stands for "re-perforation" in which a stamp has been artificially restored, usually in an attempt to defraud a buyer. Stamps from the edge of a sheet with one unperforated edge are graded "SE," for "straight edge."
Other terms
Other common terms used in grading include "mint," which implies an unused stamp in the same condition it was issued in, and therefore the best possible; "gem," which is similar to mint though it can be applied to particularly fine used specimens as well; "jumbo," which refers to a stamp with unusually large margin between the image and borders, considered a positive thing by most collectors; "obliterated," which means the cancellation mark has completely obscured the stamp image; and "Scott number," which refers to the stamp's official number in the widely used Scott catalog for stamp collectors.