Should I delete my backup on my iPhone?
If you delete your backup nothing will happen to your current photos or apps. If in the future though you try and restore from your backup your data will be lost.

To free space if you have a compatible computer you can backup to iTunes which won't use any iCloud space and will only use space on the computer.

To backup to iTunes:

Update to the latest version of iTunes.


  Open iTunes and connect your device to your computer.
  
  If a message asks for your device passcode or to Trust This Computer,
  follow the onscreen steps. If you forgot your passcode, get help.
  
  Select your iPhone, iPad, or iPod when it appears in iTunes. If your
  device doesn't appear in iTunes, learn what to do.
  
  If you want to save Health and Activity data from your iOS device or
  Apple Watch, you need to encrypt your backup: Select the box called
  Encrypt [device] backup and create a memorable password. If you don't
  need to save your Health and Activity data, you can make a backup that
  isn't encrypted. Just click Back Up Now.
  
  When the process ends, you can see if the backup finished successfully
  on the Summary screen in iTunes. Just look under Latest Backup to find
  the date and time.


(Source)