It's likely that "Coolio" emerged in the late 1980s or early 1990s within African American Vernacular English (AAVE), where it was used as a more intense way of saying "cool."
Interestingly, rapper Coolio (born Artis Leon Ivey Jr.) adopted the word as his stage name, popularizing it even further. However, he didn't create the word itself, just embraced its coolness and made it his own.