Here's how we grade our records:

Mint | Near Mint/Mint-/EX | VG+ | VG | G/G+ | Fair/Poor

Mint (M): Absolutely perfect in every way - certainly never played, possibly even still sealed. Used sparingly as a grade, if at all.

Near Mint (NM), Mint Minus (M-) or EX: A nearly perfect record. The record shows no obvious sign of wear. An LP jacket has no creases, folds, seam splits or any other noticeable similar defect. Basically, Near Mint looks as if you just got it home from a new record store and removed the shrink wrap.

Very Good Plus (VG+): Shows some signs that it was played and otherwise handled by a previous owner who took good care of it. Record surfaces may show some slight signs of wear and may have slight scuffs or very light scratches that don't affect one's listening experience. Slight warps that do not affect the sign are OK.
The label may have some ring wear or discoloration, but is should be barely noticeable. Picture sleeves and LP inner sleeves will have some slight wear, lightly turn-up corners, or a slight seam-split. An LP jacket my have slight signs of wear also and may be marred by a cut-out hole, indentation or corner indicating it was taken out of print and sold at a discount.
In general, if not for a couple of minor things wrong with it, this would be Near Mint. All but the most mint-crazy collectors will find a Very Good Plus record highly acceptable.

Very Good (VG): Many of the defects found in a VG+ record are more pronounced in a VG disc. Surface noise is evident upon playing, especially in soft passages and during the song's intro and fade, but will not overpower the music otherwise. Groove wear will start to be noticeable, as will light scratches (deep enough to feel with a fingernail) that will affect the sound.
Labels may be marred by writing, or have tape or stickers (or their residue) attached. The same will be true of picture sleeves or LP covers. However, it will not have all of these problems at the same time, only two or three of them.

Good (G), Good Plus (G+): Good does not mean bad! A record in Good or Good Plus condition can be put onto a turntable and will play through without skipping. But it will have significant surface noise and scratches and visible groove wear.
A jacket or sleeve has seem splits, especially at the bottom or on the spine. Tape, writing, ring wear or other defects will start to overwhelm the object. If it's something you have been seeking for years, and the price is right, get it.

Poor (P), Fair (F): The record is cracked, badly warped, and won't play through without skipping or repeating. The picture sleeve may be water damaged, split on all three seams or heavily marred by wear and/or writing. The LP jacket barely keeps the LP inside it. Inner sleeves are fully seam split, and written upon.

Still Sealed (SS) : Like it sounds, this record has never been opened. Presumably, this record is purrfect!