How can I use my home loan guarantee benefit as a 100% S/C Veteran, and with mid 5OOs credit score?

First thing you need to do is freeze your credit. This will stop any further instances of identity theft. Go to https://www.annualcreditreport.com/ and get a free credit report from the top three credit reporting bureaus. It will also have contact info for the three bureaus as well as more tips on spotting and dealing with identity theft.

Second is to file a police report and report the fraud at identitytheft.gov - this will make your being a victim of identity theft official.

Third, go through those credit reports and identify all those items that don't belong to you and formally dispute them. The instructions on how to do this will be with the credit reports you get.

You need to do all this before you even think about getting a loan. You need to handle the gaping chest wound you have before you think about how to fix the hole in your ruck.

Here's my problem with VA guaranteed loan. The interest rate is higher than conventional loans. I attempted to use it many times and ended up with conventional loan.

I had things go south over other things.
I had used my VA Cert, twice and didn't know it was reusable, even more. So, during the Ol' 44 era (error?), I went with a dual loan: One for the down, the other for the bulk of the loan. My credit score had hovered around "FAIR", as Florida's Revenue had me in "arrears" to my ex-wife, because they had hidden an IRS intercept that more than covered the back-payments that I had amassed due unemployment.
We had worked hard to improve my score to low-end good to get the loans, bought an older wood-framed home, then a thieving "minority" Dollar General Store Manager attempted to steal a check that my wife had accepted. That fund shortfall was caught and Arlene was terminated. Then, they found where that theft had happened and fired that witch. But, they couldn't admit the wrong towards Arlene and she couldn't find other employment.
I carried the main loan for about six months, then we lost the home, on the smaller loan being sold.
About twelve years ago, we were forced into bankruptcy and clawed our way back up and out, financed another NON-VA home and, as COL Randall C. has suggested, froze the credit (Pain when you go to use it for smaller financing - you must unfreeze whichever agency the lender will submit to, then re-freeze that. Some are very easy, though.), We are improving our ratings; the wife's and mine.
Now, I call Discover and got a shift in the rate, and spent heavily at Christmas, after putting a few costly repairs into our Explorer. Three months later (I'm 100% S-C, too.), and my score has gone from mid-"FAIR" to lower-"EXCELLENT".
My suggestions are plan hard, but enjoy life, too.