Why is my credit score so quick to drop?

well i have a low credit score but i was still able to finance a car about 8 months ago with the help of a co-signer. I have been paying my car on time since i got it 8 month now a couple of payments have even been done ahead of time. well about a month a go i got all 3 of my credit report and opened up account with free credit report dot com and i have monitoring my credit ever since. i found on my report that i have 3 negative accounts one of them was of $2000 that wasn't even mine so i quickly called the collection agency that appeared in the report and they said they would do further investigation and if its not mine they will delete it from my report im still waiting for that to happen. the other 2 i know about i paid one of them in full and the other one im giving payments to almost have it paid off. yet my credit report still stays that same. the other night i tried to apply for a credit card to see if that can help my credit go up a little and was declined. the next day i got an email from free credit report about a change in my report when i look it was the credit card that was declined made my report drop 14 points. So i pay one of the accounts in full i am making the effort to pay off another account which is almost paid off just one more payment, and i pay my car loan on time every month and my credit score wont improve. i get declined for a credit card and my score drops 14 points in one day whats the deal with that? what am i doing wrong?