It’s possible to obtain a mortgage with a credit score in the mid-500s. However, a good goal to have is 700 plus. Typically installment debt (personal loans, car loans) looks better than revolving debt (credit cards), but if you do have revolving debt, try to pay attention to the balance in relation to the limit.
Finding the right balance between saving money and paying debt will be different for everyone’s situation. Things to consider are:
Minimum down payment required for the price point you are looking at.
The amount of total debt that you currently have
The minimum monthly payments required on these debts.