My psych grade was lower than all of my other clerkships, although not bad, and the evaulation was worded rather generically. I don't think it necessarily represents your ability or interest in psych, but often how the time is set up and how much time you have with your attending.
To make up for this, I scheduled my sub-i in psychiatry (could also be an elective) in the beginning of the 4th year, got a great grade and a LOR from that attending. I was never asked about my 3rd year grade because of this. If they did ask, I would be honest about why it happened but use your future grades to demonstrate that you do have the interest and capacity for psychiatry.
Good luck!