when a yoyo with a ball bearing makes a grinding/rumbling like noise is that bad?

It usually means the bearing should be cleaned and lubed a bit. Dry bearings make noise. Dirty bearings make noise. Bearings are not made to be run dry.

Like jhb8426 said, it needs cleaned. Lube isn’t necessarily required though, some like the bit of noise it does make (like me) after cleaning . It doesn’t really matter whether you add lube or not, just makes it a bit responsive in the first few throws and not as loud as it would be running without lube.