What Laura said is right. Increasing the dB level in any frequency means, the more chance of you clipping the audio (distortion).
However the clipping of audio hasn't happened in Lumia so far because it has got a great amplifier and the volume is software limited internally.
Clipping also depends on how much your earphone can handle. EQ tuning depends on both the inbuild amp and the earphone you use.
So there is no general setup which works across all devices in the same way.
I learnt this while I was mixing recorded instrument tracks for my band few years ago.
I have a mix of FLAC files and MP3 files in my phone.
I have a Sennheiser HD 202 II and Philips 1405.
I use EQ for Philips 1405, the low quality earphone.
I use EQ for Sennheiser HD 202 II, while playing MP3.
I do not use EQ for Sennheiser HD 202 II while playing FLAC. (I do make exceptions at times when the bass is not enough)
Lossless audio is at its best when heard without using an EQ provided you have a good quality headphone or earphone with big drivers.
Also I use Virtual Surround only with the Sennheiser because with the cheap Philips, it sounds like crap.
Virtual Surround gives the depth of sound, like the sound is coming from real speakers at a fixed distance and sub-woofers thus enhancing the bass.
This is my EQ setup for my 640XL for all genres.(EQ setups for me vary by device and by type of earphone).
I put months of careful tuning, listening to all my tracks with both my earphone and headphone before coming to this.
All are in multiples of 3 since total of 12 positions, and to form a smooth wave as much as possible.
7 Band EQ is more than enough for a phone, but Lumia could have done with a 10 band.(not complaining)
More bands = more control over more frequencies = better chances of getting a smooth wave.
Also I wish the Bass frequency controls were like 40, 250 & 500. The mid should have been 1KHz because it is standard in almost all device. I do not care about the high's.
I don't know if anyone has noticed this or not but there is separate preset for speaker and headphone.
While you are unplugged, the custom preset gets saved for speakers.
While you are plugged in, the custom preset gets saved for headphones.