Acting Against Reputation
In most cases, minor or secret acting against reputation has no effect on that reputation. However, repeatedly acting in a manner contrary to reputation, or doing so even once in a public and/or extreme way (such as news would carry) can lead to the loss of reputation at the DM's discretion, and the points will be returned to the character to be respent in an appropriate way.
For example, Martin the Green has the reputation Milquetoast +4. However, if he gave an impassioned speech on behalf of the gnomes of Garvan to the king of Gothanius before the full court, he might undo that reputation, perhaps making him Outspoken +2 or Friend of Gnomes +2 (with two points to be allocated later).
Positive Light/Negative Light
Reputations generally have two sides to them, and reputations that may seem negative can often be useful in certain situations. While Martin's Milquetoast +4 might act as a penalty when trying to use the Intimidate]skill, it could be useful to Deceive someone who thinks him too meek to try to lie. Or might help with Insight, if the person being interacted with thinks Martin is too slow to act to bother hiding his true feelings very well. Something that sounds like it'd be positive all of the time, like Hunter of the Happet Wood +4, could very well backfire in crucial situations and act as a penalty. In this case, wood elves might take offense at a human being known as such, for example.
Another more general example might be someone who has a reputation for being Brave +3, might come off as overconfident in some circles and that quality might be seen in a bad light.
Reputations may also be known but still be regarded neutrally since they have nothing to do with the situation. For example, [he Silent One's Eyes of the Eagle +2 would have no effect when the ranger was trying to bluff an innkeeper to into letting him into someone else's room.
Stacking Reputations/Conflicting Reputations
Reputation bonuses DO NOT stack. If more than one of a character's reputations would apply in the same situation only the higher one is applied. This is the case for reputations seen in both positive or negative lights. Conflicting reputations, however, CAN offset one another.
Changing Reputation
The DM may decide that events in the story of a campaign or the actions of a character have somehow changed the character's reputation. In this case, the DM simply declares that the character's actions - or the perception of the actions - has given the character a new reputation, increased a reputation the character already had, or decreased a reputation.
It is important to note that while players get to initially decide where their reputation points go, these points are equally the domain of the DM, and may be changed at any time if deemed appropriate. Typically, however, removed points are left to the player to allocate along guidelines set by the DM as suggested by the actions of the character and the events of the campaign. Players are encouraged to work in-game to establish reputations they'd prefer, or to counteract reputations they may have developed along their way against their will.
Saving Reputation Points
Characters are not required to spend their reputation points right away, and may save them to allocate them as the game goes on and a particular reputation becomes clear. Note however, that no character can have //no// reputation, and not spending the points at all will effectively mean leaving it up to chance and the DM. Even a character that wants no notoriety, might develop a reputation as Quiet, Loner, Conceited or even Mysterious.