I have recently bought a "keyword" rich domain. But am hosting with a different company. This hosting company has provided me with a domain already and ADD ON domains are not allowed without extra cost. The Domain Hosting company provides forwarding services for free but I found that they use 302 redirects which I have read somewhere aint good for SEO. So will changing the 302 redirect to a 301 redirect help me in utilizing the domain - name for SEO purpose?
From an SEO standpoint, using a 301 redirect from the "keyword rich" domain to the domain your hosting company provides will not help you. A 301 redirect is the right redirect to use so as not to incur any SE penalty, but the domain your host provided will be the site the search engines see and use in their rankings. If your main concern is having the keyword rich domain as your main url, then I would switch hosting companies or negotiate with them to allow you to use that domain as the main one.