Circular reasoning is when the assumption of the truth of a claim you are making is the basis for why you believe it is true.
It's like being inside a bubble seperated from the rest of reality, in which you make your own rules that are just true. It is a complicated way of saying, "Because I said so," maybe without even realizing it.
It should be obvious why such mindsets are not reliable. If we apply this thinking to one thing we must apply it to everything equally, resulting in chaos and contradicting values.
The reason we tend to apply it to gods is because we are told by others that we should make an exception for these gods.
But whether or not a God exists, this method of thinking is not reliable to make that determination.
You cannot make up the rules, and then make conclusions off of the rules you created yourself. We must observe the rules, and not take conclusions from things we do not observe.