The decoding of a sensory or motor variable from neural activity benefits from a known ground truth against which decoding performance can be compared. In contrast, the decoding of covert, cognitive neural activity, such as occurs in memory recall or planning, typically cannot be compared to a known ground truth. As a result, it is unclear how decoders of such internally generated activity should be configured in practice. We suggest that if the true code for covert activity is unknown, decoders should be optimized for generalization performance using cross-validation. Using ensemble recording data from hippocampal place cells, we show that this cross-validation approach results in different decoding error, different optimal decoding parameters, and different distributions of error across the decoded variable space. In addition, we show that a minor modification to the commonly used Bayesian decoding procedure, which enables the use of spike density functions, results in substantially lower decoding errors. These results have implications for the interpretation of covert neural activity, and suggest easy-to-implement changes to commonly used procedures across domains, with applications to hippocampal place cells in particular.