In this work, we present an efficient rank-compression approach for the classical simulation of Kraus decoherence channels in noisy quantum circuits. The approximation is achieved through iterative compression of the density matrix based on its leading eigenbasis during each simulation step without the need to store, manipulate, or diagonalize the full matrix. We implement this algorithm in an in-house simulator, and show that the low rank algorithm speeds up simulations by more than two orders of magnitude over an existing implementation of full rank simulator, and with negligible error in the target noise and final observables. Finally, we demonstrate the utility of the low rank method as applied to representative problems of interest by using the algorithm to speed-up noisy simulations of Grovers search algorithm and quantum chemistry solvers.