The correct answer is, of course, simply
#overcompressed
overcompressed
or perhaps "poorly compressed"
If you have to compress a track to send to a friend, and it turns out crappy, ie if you compressed it too much, there is one - and only one - phrase you use to describe that, you say
#"we compressed it too much, sounds crap"
"we compressed it too much, sounds crap"
Occasionally the word "overcompressed" might be used. 90% of the time a simple phrase like "compressed to much" or "made too small" is used.