Correct answer:
b. creyó
Since mi hermana can be replaced by the subject pronoun that matches the third person singular in feminine form, which is ella, then we must use a conjugation matching this person, too. The more logical answer is creyó that comes from the verb creer and is conjugated in the preterite tense. This tense is one of two simple past tenses. It is used to describe actions that took place or were completed at a certain point in the past. Finally:
Mi hermana creyó en Santa Claus hasta que tenía 13 años (My sister believed in Santa Claus until she was 13 years old)