This is the book rating system I used in my old reviews. I stopped assigning stars to books some time ago, because they were subjective and largely arbitrary. (I still assign them in my reading log, based on the likelihood of me rereading the book).
I rate books first and foremost on reading pleasure and ability to draw one into the story (i.e. on the level of escapism they offer). Technique, such as plot, characters, dialogue, etc., is an important consideration: I like plots to be solid, characters to be believable and dialogue natural, so if the plot is full of holes, the characters flat and the dialogue stilted, I generally don't enjoy a book, although if only one of these things is present, I may enjoy it but giver it a lower rating.
I don't take into consideration what others think of the book or if it's classified as High Literature, Classic, Trash or something else. For the most part I leave the judgement of fine literary merit to academics and professional reviewers.
I am generally pretty good at judging which books I am going to like, so I rarely end up reading a less than 2 star book unless I come across a highly recommended must-read book that everyone else loves but I hate.
I opted for the 5 star system, as it seems to be the most common, and therefore the one most people are familiar with.
These are my criteria for giving star ratings to books:
5 stars: excellent, perfect or nearly perfect, must read, will probably keep it, will probably read it again (although see notes)
4 stars: good, highly recommended, a few flaws, strong contender for the keeper shelf, strong possibility that I will re-read it
3 stars: a decent read, nothing earth-shattering, several flaws, might re-read but will probably not
2 stars: mediocre, dull or badly flawed, would not read it again, sorry I bought it
1 star: waste of time, sorry I bought it, sorry I read it
0 stars: I want my money back and a reimbursement for the time wasted reading it
A plus (+) after a number means the book is not quite good enough for the next class above.
Strangely enough, many of my favourite re-reads are four star books. Some of the 5 star ones are just too perfect to be read more than once, like when the plot hinges on the revelation of something, the pre-knowledge of which makes the book dull or uninteresting - but of course there are also 5 star books that I re-read periodically.