I don't rate my music on a scale of one to five. A song is either bad, good, or amazing. If something sounds mediocre, chances are I won't be back for a visit. iTunes offers the ability to rate songs with up to five stars, which, to me, if I rated them conventionally, would be like marking music that I will never listen to - not a bad thing but, at that point, why waste the space?
So here's what I do: For the most part, I dump the music I don't like down the shit can. If an album has one good song on it though, I'll keep the whole album together to avoid a messy library (yeah, I'm OCD like that). With the music that I do keep, I use iTunes' stars to create my own rating system-
I'm a film student, so Film Songs would be music that I would put in a film or that I think is inspirational. Songs that I don't find that spectacular I leave unrated. The rest I think is pretty self explanatory.
The great thing about this system is that as I listen to music on my iPod I can categorize it.