Assuming you're using a 45 degree blade, your offset should be set to .25. Perform a test cut to make sure you are getting a clean square with sharp angles when you weed the circle out.
Your problem could be an overexposed blade. You should barely be able to see the tip of the blade. Most will tell you a credit card to half a credit card thickness. Roland tells you the thickness of the material plus half of the carrier. AKA, about half a credit card for most materials.