As I understand it, this notion only really came into vogue during the European Enlightenment of the 17th and 18th centuries. For much of human history, government served as a way for monarchs, emperors, and the ruling elite to maintain -- and expand -- their hold on power, regardless of what was best for the governed. Indeed, we still see remnants of this in pretty much every government on the planet -- some just are less subtle than others. Arguably, we've spent the last 3 centuries trying to subvert this process and bend it toward, as you put it, making things "better" for all.
The idea is that social credit discourages behaviour which is bad for people (e.g. traffic violations and small-scale tax evasion) and that makes things better for people. I think it's easy to see how this could be effective, but the criticism is really about fairness (due-process). Proponents would probably argue that the consequences are relatively small compared to traditional criminal justice (going to jail; execution) so it doesn't matter, and the streamlining of justice outweighs the disadvantages.