1849 Sin is an offense against reason, truth, and right conscience; it is failure in genuine love for God and neighbor caused by a perverse attachment to certain goods. It wounds the nature of man and injures human solidarity. It has been defined as "an utterance, a deed, or a desire contrary to the eternal law."121
1850 Sin is an offense against God: "Against you, you alone, have I sinned, and done that which is evil in your sight."122 Sin sets itself against God's love for us and turns our hearts away from it. Like the first sin, it is disobedience, a revolt against God through the will to become "like gods,"123 knowing and determining good and evil. Sin is thus "love of oneself even to contempt of God."124 In this proud self- exaltation, sin is diametrically opposed to the obedience of Jesus, which achieves our salvation.125
This is the definition of the sin according to the Cathechism of the Catholic Church. When you say it might psychologically damage one's self-esteem and sense of self, it sounds like you're implying that we shouldn't acknowledge that we have done bad things. If you've done something bad, it is a sin and you should repent. Even an atheist should believe that we have done evil things and that we should repent for them. They might not call it sin but it's the same thing.