Shredders are rated by security levels P-1 to P-7 based on the size of shredded paper particles. They are categorized into strip cut (P-1, P-2), cross cut (P-3, P-4), and micro cut (P-5 to P-7), with higher levels offering finer cuts and increased security. For safely disposing of sensitive documents, a minimum of a P-3 level shredder is recommended. Cross cut and micro cut shredders provide better security by creating smaller particles, making reassembly of shredded documents more challenging.