Is there merit in increasing calories to lose weight?

It depends on a lot of factors, but mainly what your deficit is like right now. I raised my calories to around 1800 because after determining what my TDEE really is, I wasn't eating enough. I now eat between 15-20% less than TDEE whereas before I was eating around a 40% deficit and didn't even realize it.

However, someone else might be eating 1500 calories because that IS the correct deficit for them and their TDEE is just lower than mine was. They would not be doing themselves justice by eating more.

I'm in the camp of "eat as much as you possibly can while still managing to lose weight on a comfortable pace." If you can eat more and still lose weight, then I would advise you to do it. Eating more while still in a deficit gives you more energy and helps in recovery. Think of food as fuel for your body rather than something you do to gain weight.

But it all reall depends on what your maintenance calories are and how much under that you are currently eating.

If I've had a really busy and active day then I will eat more that day because my body burned more, but on a normal day I eat what MFP says which for me is 1630/day but I am a self-employed housekeeper so my job is very physical

You're probably going to have to give it a little longer than a week When I first started and knew nothing about TDEE I was at 1200 calories a day, where MFP put me for some reason. I lost about 15 lbs really quickly and then wasn't losing anything and found myself really hungry and no energy. After I did the research I bumped up my calories to 1500 and was upset when the first week I gained and then for the next two weeks only lost about .5 lbs. If I'm focused on my food and exercise I can lose 2lbs a week. So I would raise your calories but I also would give it some time. You should look at your other friends diaries (the ones who are losing consistently) and see how many calories they are eating, I'd wager most are above 1200.