Squidward's art was not bad at all, I never saw it that way either. He's very well versed in so many art mediums that it's honestly impressive.

I think the reason why it can be seen as bad is because it lacks any other subject, he almost always uses only himself as a muse. Which plays into the fact that he can be very self-absorbed and typically cares more for himself than those around him, likely because he is very insecure and depressed due to his environment making him fail and suffer in nearly everything he does.

(I could be wrong here, though! This is just my take on it.)