Something has to be done....I'm not an expert in Western saddlery, but I can plainly see that.....could you sell your old saddle and use the money to buy a used saddle that fits right? Who fitted the current saddle to your horse? You may have to give the horse a few days or more to recover before riding him again. The saddle also might be in the wrong place, or have too thin a saddle pad. Never use just a blanket; if you use a saddle blanket put a pad beneath it. I use a thin blanket, but below it I always have a foal pad.