If you’re planning to work with photos in your digital composition project, make sure the photos are of the highest quality possible before you import them into the composing tool you’ve chosen.
If the photo was created or scanned in at low quality, you may not be able to do anything to fix that, but if you have several versions of the image, use the highest quality one you have that’s in a format your composing tool will accept. That’s probably jpg, png, or gif, although some tools may accept tiff files.
By high quality I mean high resolution, which is not the same as large file size. For example, the exact same image saved in both jpg and png format will differ quite a bit in file size, with the jpg being much smaller, but they will likely be of comparable quality, as there are other reasons why a person might choose one format over the other.
If you’re sure you won’t need to edit the image again later, then you might choose jpg because its smaller size, but each time you save a jpg, it goes through a compression routine that degrades its quality. So you should think of jpg as an “export” format, meaning that once you’ve exported or saved an image in that format, you shouldn’t edit it again.
If you have an image you want to work with a bit, first convert it to png or tiff format, or the native format of the image editing app you’re working with, as each time you save the image in that format, you will not lose any quality. Then use export or “save as” to produce a jpg you can then insert into your project.