The term 'ratchet' has no less than two distinct meanings. As an adjective, it describes a person or activity that is out of hand, out of control, or generally whack in some way. As a verb, or a direct object ("do tha ratchet, yeah, do tha ratchet..."), the term serves to identify or describe the dance craze--and the movements associated herewith-- of the Ratchet.
Raggedy, dirty or jagged, etc.
eg. Your hairline is ractchet.
eg. That car is ratchet.
disgusting female -- original source is likely a corruption of "rat ****." Ratchet is a much more substantial insult than "*****" or "ho," and much more likely to give offense or be considered a "fighting" word.