I don't believe there is a limit. They are however, encouraging downgraded, low resolution or PS1 style graphics. There are a few really good tutorials on youtube, as well as a few neat PS1 effect on the unity asset store.
Trying to make a spoopy game, straying away from ultra realistic graphics is a pretty neat accomplishment.
Remember to avoid outright jumpscares and instead have a unique twist or a unique mechanic within your game.
Goodluck!